The Economist Intelligence Unit (EIU) has worsened its outlook for oil consumption following the recent crash in prices and the escalating coronavirus situation.
EIU lead analyst for energy Peter Kiernan said oil prices would continue to struggle as the coronavirus pandemic’s impact on the global economy intensifies.
“With prices now well below the $US30 ($50) per barrel level, they will struggle to recover during the remainder of the first half of this year at least,” Kiernan said.
“This is despite the fact that the prospect of co-operation between Organisation of the Petroleum Exporting Countries (OPEC) and Texas oil producers was raised late last week, with OPEC inviting a representative from the Texas Railroad Commission to attend the group’s next meeting in June.”
Kiernan advised that joint output cuts from OPEC and some United States producers may be difficult to realise however, as not all players in the American oil sector are aligned with the idea.
“Furthermore, while supply cuts may help prevent prices from falling further, they alone will not be enough to see prices fully recover the lost ground over the last month,” Kiernan said.
“This would need a noticeable recovery in demand, which is unlikely in the short to medium term.”