In January, Brent crude oil prices appear to be recovering following
the freefall which began in October and led Brent crude oil prices
to hit a one-and-a-half year low by the end of December. On 11
January, oil prices traded at USD 59.1 per barrel, which was 1.1%
lower than on the same day last month. Although the benchmark
price for global crude oil markets was 16.0% lower than on the
same day last year, it was up 16.9% on a year-to-date basis.
Thawing relations between China and the United States has fueled
hopes that a full-blown trade war between the two superpowers
will be avoided, boding well for the global economy. This situation,
coupled with the oil production cut announced by OPEC and Russia
in early December and effective in January 2019, has supported oil
prices so far this year. However, Brent crude oil remains still at low
levels due to the collapse in oil prices observed in the October–
December period due to widespread concerns of a new global
oil glut. The U.S decision to grant waivers to Iranian oil buyers,
coupled with a somber global economic outlook and strong oil
production by Russia, the OPEC and the United States, negatively
impacted oil prices.
Looking forward, analysts surveyed by FocusEconomics expect,
on average, that the recovery in oil prices will strengthen in the
coming months as the oil production cut agreed by OPEC+ will
keep the global oil market adequately supplied. However, a
potential global economic slowdown and strong oil production will
limit the rebound. FocusEconomics panelists see prices averaging
USD 69.2 per barrel in Q4 2019 and USD 68.3 per barrel in Q4
2020.
In light of recent developments, 3 panelists upwardly adjusted their
Q4 2019 forecasts compared to last month. Meanwhile, 22 panelists
kept their projections unchanged and 17 cut their forecasts.
Given that high degree of uncertainty in the oil market, the panelist
forecast range for Q4 2019 runs from a minimum of USD 51.0 per
barrel to a maximum of USD 80.0 per barrel.
West Texas Intermediate (WTI) crude oil prices declined
sharply in recent weeks and hit an over one-year low of USD
44.5 per barrel on 27 December. Afterwards, however, prices
for the black gold started to recover. WTI crude oil prices
traded at USD 51.4 per barrel on 11 January, which was down
0.4% from the same day last month. Although the price was
down 19.4% from the same day last year, it was 13.9% higher
on a year-to-date basis.
The price for WTI crude prices plummeted since U.S. President
Donald Trump announced waivers for eight countries to
continue purchasing Iranian oil in early November. Moreover,
the United States continued to pump oil at record levels in
recent months, reaching an average of 11.7 million barrels
per day in the week ending 4 January. However, recent news
that China–U.S. trade talks were progressing, coupled with
reduced supply by OPEC+ members, boosted prices since
the start of the year. In a sign that the U.S. economy could
be cooling, U.S. crude oil stockpiles decreased less than
expected in the week to 4 January, while inventories of refined
products surged in the same period.
Looking forward, WTI oil prices are likely to rise from current
levels as the oil cut production by OPEC+ will reduce global
oil supply. Robust U.S. shale production, however, will limit
any sharp upward movement. For Q4 2019, analysts expect
prices to average USD 62.2 per barrel, before increasing
slightly in Q4 2020 to USD 60.9 per barrel.
In response to recent developments, 14 panelists left their
forecasts unchanged for Q4 2019 from last month, 1 upgraded
their projections, while 17 made a cut to their projections.
The spread between the minimum and the maximum oil price
forecasts remains relatively wide: For Q4 2019, the maximum
price forecast is USD 75.0 per barrel, while the minimum is
USD 45.5 per barrel.
Natural gas prices have retreated over the last month after
November’s multi-year high spike. On 11 January, the Henry
Hub Natural Gas price was USD 3.10 per one million British
thermal units (MMBtu). The price was 29.7% lower than on
the same day in the previous month but was up 5.4% on a
year-to-date basis. In addition, the price was 0.5% higher than
on the corresponding date in 2018.
The fall in prices was chiefly due to mild weather in the U.S.
over the past month, which dampened heating demand and
which is expected to persist in the coming months. Moreover,
the previous month’s significant jump in natural gas prices
caused utility firms to shift to alternative energy sources such
as coal, which further weighed on demand. Some kind of
pullback was always to be expected following such a dramatic
price increase in November, which likely saw prices run ahead
of fundamentals amid speculative demand.
Looking ahead, prices are expected to tick up slightly from
their current level going forward, supported by a global shift
away from coal towards gas, a cleaner non-renewable energy.
However, high U.S. supply should contain any price increase.
FocusEconomics panelists see the spot price averaging USD
3.14 per MMBtu in Q4 2019, before climbing to USD 3.17 per
MMBtu in Q4 2020.
In light of recent developments, 16 panelists left their Q4
2019 forecasts unchanged this month, 2 upgraded their price
forecasts, while 2 revised their projections downwards.
The maximum price forecast for Q4 2019 was USD 3.82
per MMBtu, while the minimum forecast was USD 2.57 per
MMBtu.
FUENTE: https://www.focus-economics.com/ Desde Barcelona -España
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