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Expecting a fierce and protracted oil price war, Standard Chartered slashed on Monday its oil price estimates for this year and next, saying WTI Crude prices would average $32 a barrel in 2020.
The bank cut its outlook on WTI Crude from $59 a barrel it had previously expected.
At 2:15p.m. EDT on Monday, WTI prices were trading at $32.39 a barrel, down by 21.5 percent on the day for the biggest one-day crash since 1991, after Saudi Arabia fired the first shot in an oil price war with Russia, following the disintegration of the OPEC+ coalition which failed to agree on a production cut deal on Friday.
For 2021, Standard Chartered expects WTI Crude prices to average $41 a barrel, down from its previous estimate of $63.
The bank also slashed its projection for the average Brent Crude price in 2020 and 2021. Standard Chartered now sees Brent prices averaging just $35 a barrel this year, down from $64 per barrel previously expected. Next year, Brent Crude should average $44 a barrel, down from $67 expected just days ago.
“With supply ramping up at the same time as coronavirus-related demand losses reach their maximum, the short-term floor to oil prices is extremely weak,” Standard Chartered said in a note, as carried by Reuters.
Standard Chartered wasn’t the only bank that slashed its oil price outlook in the near term after the Saudi-Russia oil bromance abruptly ended at the end of last week.
The oil market has entered yet another New Oil Order with the price war, with US$20 Brent Crude a real possibility in the coming two quarters, Goldman Sachs said on Monday.
“US$30/bbl here we come,” ING’s Head of Commodities Strategy Warren Patterson said on Sunday as ING analysts slashed their Q2 Brent Crude forecast to $33 a barrel from $56, and the Q2 WTI Crude estimate to $28 per barrel from $50.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.