European Commission sharply lowers forecast for oil prices in 2019-2020
By Mirsaid Ibrahimzade
The European Commission (EC) revised its forecast for the average annual price of Brent crude oil in 2019-2020, sharply lowering the estimate to $ 61 per barrel amid growing production in the United States and Canada.
In the autumn of 2018, the EC expected that the average price of Brent oil in 2019 would be at the level of $ 80.6 per barrel, in 2020 - $ 76.7 per barrel.
“It is expected that during the forecast period, oil prices will be held back by increased production in the United States and Canada and a decline in global oil demand. According to futures markets, the average price of Brent crude oil in 2019 and 2020 is expected to be at $ 61 per barrel. This is 24 percent lower than it was published in the autumn forecast for 2019, and 20 percent lower than the forecasts voiced earlier for 2020,” says the EC report.
Currently, oil prices on world markets are falling. On the London ICE (InterContinental Exchange Futures), the price of one barrel of Brent crude fell by $ 0.37 to $ 61.26; on the New York Stock Exchange NYMEX (New York Merchantile Exchange) "Light", having fallen in price for $ 0,37, has made $ 52,27.
Meanwhile, the price of a barrel of Azeri Light brand oil fell by $ 1.38 to $ 63 on Friday.
Note that the price of a barrel of Azeri oil, having dropped to a minimum in December 2001, was $ 19.15, and in July 2008 it reached a maximum of $ 149.66.
Generally, the price of oil from the New Year rose by 11 percent. But from last year's fall has not recovered.
Oil prices since the beginning of the year rose by more than 11 percent. According to the ICE, on Wednesday afternoon, the price of March futures for Brent rose above $ 60 per barrel. For comparison, on the last day of 2018, Brent crude oil cost only $ 53.8 per barrel.
Prior to this, oil prices fell for several months due to investors' fears that oil demand will be low amid a global economic slowdown and trade wars between the United States and China.
The main reason for this significant growth was the expectations of market participants that demand and supply in the oil market stabilized as a result of the OPEC + transaction, analysts at Nordea Bank write. OPEC and non-cartel countries agreed to cut oil production in early December. The OPEC + Agreement comes into force this year.
In addition, investors were encouraged by Saudi Arabia. The country is looking for an opportunity to increase the cost of Brent oil to $ 80 per barrel through reducing oil exports to 7.1 million barrels per day, The Wall Street Journal reported, citing OPEC representatives. For comparison - in December, exports amounted to 7.3 million barrels per day.
It seems that the oil market will be balanced in 2019, according to a Morgan Stanley report. However, prices are unlikely to be above $ 65 per barrel amid a reduction in the share of OPEC and a fall in imports from China, they forecast in the bank. Earlier, the bank predicted that oil prices could rise to $ 75 per barrel by the end of the year.
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