Brent crude oil prices trended upwards in recent weeks, thanks to falling global output after OPEC+ extended production cuts and as ...

Global Oil Prices




Brent crude oil prices trended upwards in recent weeks, thanks to falling global output after OPEC+ extended production cuts and as consumption rebounded somewhat amid easing lockdowns in major economies. On 12 June, oil prices traded at USD 38.9 per barrel, which was 29.2% higher than on the same day last month. That said, the benchmark price for global crude oil was 36.3% lower than on the same day last year and was down 41.4% on a year-to-date basis. An ongoing rebalancing of supply and demand conditions supported global oil prices, pushing them to a three-month high in early June. On the demand side, healthier growth dynamics in China and gradually easing lockdowns in major economies—including the EU and the U.S.—supported global business activity and propped up domestic travel, in turn boosting oil prices through increased consumption. Moreover, on 6 June, OPEC+ extended its unprecedented output cuts until the end of July which, coupled with a sharp slowdown in drilling in North America, boded well for prices. That said, the deal failed to significantly boost prices as Gulf OPEC members have not extended extra voluntary oil cuts. The oil price outlook remained muted in June, as considerable uncertainty tamed improving demand prospects. On the one hand, demand should recover going forward amid a continued easing of global lockdowns which, coupled with constrained supply, is seen supporting oil prices through year-end. On the other hand, prospects of a rebound in production in Libya and the U.S. cloud the outlook, with the fragility of a post-pandemic economic recovery and a possible second wave of infections in H2 major downside risks to the prices. FocusEconomics panelists project prices to average USD 39.6 per barrel in Q4 2020 and USD 50.6 per barrel in Q4 2021. This month, 15 upgraded their projections for Q4 2020, although 4 panelists revised down their estimates. Meanwhile, 15 panelists left their projections unchanged. Highlighting the lingering uncertainty, panelists have markedly diverging views on the price outlook: For Q4 2020, the maximum price forecast is USD 50.0 per barrel, while the minimum is USD 24.9 per barrel.










West Texas Intermediate (WTI) rebounded strongly over the past month, propped up by dwindling global production amid OPEC+ supply cuts and as demand recovered somewhat thanks to easing lockdowns restrictions in most countries. WTI crude oil prices traded at USD 36.2 per barrel on 12 June, which was 40.7% higher than on the same day last month. However, the price was 29.1% lower than on the same day last year and was down 40.7% on a year-to-date basis. WTI prices hit three-month highs in early June, amid an improving demand backdrop and as the impact of global output cuts transmitted into oil markets. A healthier economic panorama in China and the lifting of lockdowns in Europe and the U.S. boosted prices thanks to recovering business activity and travel-related demand. On the supply side, on 6 June, OPEC+ extended its output cuts until the end of July, further supporting prices. That said, the decision by Gulf OPEC members to not extend extra voluntary oil cuts capped the upturn, with further downward pressure stemming from fears of rising production in the U.S. and Libya, as well a record build-up in U.S. inventories in the week to 5 June. The oil price outlook remained largely downbeat in June, although early signs of recovering demand added some optimism. A further rebalancing of supply and demand conditions should support prices through year-end, amid constrained global supply and as the easing of pandemicrelated restrictions pushes demand back closer to preCovid-19 levels. On a less positive note, the severity of the global economic downturn, a possible second wave of infections, geopolitical risks and supply volatility in Libya are all major risks to the price outlook. FocusEconomics panelists project prices to average USD 36.0 per barrel in Q4 2020 and USD 47.2 per barrel in Q4 2021. This month, 14 panelist upwardly adjusted their Q4 2020 forecasts and 12 analysts kept their estimates unchanged compared to last month. Meanwhile, 3 panelists cut their forecasts. Amid persistent uncertainty our panelists have markedly diverging views over the price outlook: The panelist forecast range for Q4 2020 spans from a minimum of USD 20.0 per barrel to a maximum of USD 45.0 per barrel.


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