Barclays slashed its oil price estimates for this year for the second time in two weeks, expecting WTI Crude to average $28 a barrel in 2020 due to the demand shock from the coronavirus and the supply shock from the Saudi-Russian oil price war.
On Tuesday, the bank slashed by $12 a barrel its estimates for average WTI Crude price this year to $28 per barrel, and cut by the same amount–$12 a barrel–its outlook for the average Brent Crude price for 2020. Barclays now sees Brent Crude averaging just $31 a barrel this year, largely in line with other major banks that have already slashed their forecasts for Brent to the low $30s.
“Prices are likely to remain under pressure until the virus situation turns the corner, and if we continue on the projected market balances path, even Saudi Arabia and Russia will not be immune from the price fallout,” Barclays said in a note on Tuesday, as carried by Reuters.
Just two weeks ago, Barclays had cut its oil price outlook for 2020, slashing by $16 a barrel its forecast for Brent Crude to $43 a barrel from $59, and for West Texas Intermediate to $40 from $54 per barrel previously.
The price outlook was slashed again today due to the spreading of the coronavirus and estimates of massive demand destruction across the world as many countries are now under lockdown, and thousands of flights are grounded.
Last week, Morgan Stanley further cut its oil price forecast, expecting Brent Crude to average $30 a barrel during the second quarter, from $35 a barrel earlier. As early as March 9, Goldman Sachs had warned that $20 oil was on the horizon.
Oil prices will likely remain at around $30 for months amid the price war and the fight for market share while the coronavirus pandemic batters oil demand, a Reuters poll of analysts showed ten days ago.