Uncertainty over global economic and oil demand growth will continue to weigh on oil prices next year as the oversupply in the market will likely persist, the monthly Reuters poll of economists and analysts showed.
According to 42 experts, Brent Crude will average US$62.50 per barrel in 2020, just slightly up
from last
month’s poll by
Reuters, in which analysts predicted an average price of US$62.38 for the
international benchmark next year.
The economists expect WTI Crude to average US$57.30 a barrel next year, also slightly up
from last month’s US$56.98 estimate.
At 07:36 a.m. EDT on Friday,
WTI Crude was down 0.15 percent at US$58.02 and Brent Crude was trading down
0.62 percent at US$62.88.
The analysts expect weak
demand growth in the first half of 2020 due to weak economic growth. On the
other hand, most agree that there is too much oil in the market. Demand growth
could be anywhere in the range of 800,000 bpd to 1.4 million bpd, according to
the experts surveyed by Reuters.
Next year, oil demand growth is expected to pick up from this
year’s lower growth pace, but oil supply from producers not part of the OPEC+
coalition—such as the United States, Brazil, and Norway—is seen growing faster than the rise in demand, and offsetting efforts of the
cartel and its allies to rebalance the market.
The International Energy
Agency (IEA) sees non-OPEC countries adding another 2.3 million bpd to their
supply in 2020, while global oil demand growth is expected at 1.2 million bpd.
In the Reuters poll a week
before the OPEC+ meeting in Vienna, most experts expect OPEC and its non-OPEC
partners led by Russia to decide next week to roll over the cuts, but deeper
cuts are unlikely, because OPEC’s leader Saudi Arabia would not be willing to
sacrifice additional market share than it has already done.
Russia is expected to
continue playing along, but will still be busting its production
cap, Caroline Bain, analyst at Capital Economics, told Reuters.