Yemisi Izuora
HSBC Global Research on Monday raised its 2020 oil price forecasts and projected the market would move into deficit in July helped by output cuts.
The Organization of the Petroleum Exporting Countries, OPEC, Russia and others, a group known as OPEC+, agreed on Saturday to extend cuts of 9.7 million barrels per day (bpd) until the end of July.
HSBC raised its 2020 Brent oil price forecast to $39 from $37 per barrel and its outlook on West Texas Intermediate (WTI) to $34.60 from $32.80.
“We see the market almost back in balance in June, and moving into deficit in July,” HSBC said, adding that a fall in inventories could mean the OPEC+ pact to curb production may not last to the end of the year.
The exact trajectory of the demand recovery is less clear, HSBC added, citing huge uncertainties regarding how countries emerge from COVID-19-related lockdowns.
“We think this uncertainty is behind the latest push from OPEC+; its goal of eliminating the market surplus is in sight, but the precise timing is not yet clear.”