Oil prices to remain depressed over coming years - Danske Bank
|According to analysts at Danske Bank the main risks to the upside in oil prices are further rise in tensions in the Middle East and on the downside, if the trade war re-escalates.
Key Quotes:
“Weak demand following a further drop in global manufacturing activity, trade war and Brexit anxiety have raised concerns about a growing surplus on the world oil market. Consequently, OPEC+ has started to look deeper into individual country compliance to oil supply cuts agreed in June. We expect global economic weakness to persist in 2020 with a notable risk of a global economic recession and do not expect a trade deal this side of the 2020 US Presidential election. Longer-term the recent attack on Saudi Arabia’s crude facilities may lead to higher strategic reserves and/or crude stocks, e.g. at Asian importers, as insurance against future attacks.”
“In the short-term, the main risks to our oil prices forecasts are on the upside from a further rise in tensions in the Middle East and on the downside if the trade war re-escalates. More attacks on oil production facilities remain a tail risk in our view but the possibility is likely to keep a small premium on oil prices ahead.”
“We expect oil prices to remain depressed close to current levels in the coming years mainly due to weak global demand on the back of weak growth, trade tensions and a strong USD. We forecast Brent will average USD65/bbl in Q4 and USD60/bbl in 2020.”
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