The global oil industry may be reshaped from this year’s pressures. Citi analysts expect Brent and WTI prices to average US$17/bbl in 2Q and US$25-$30/bbl in 3Q and 4Q.
Brent crude prices fell by more than 20% from Friday’s close of US$45.27 after Saudi Arabia announced price cuts and output increase. This led to substantial losses in equities and energy credit that were already weak from COVID-19 contagion. At the time of writing, Brent at US$33 is the lowest since 2004, with the exception of a few weeks in early 2016.
The US-China trade relationship and US policies are among wildcards that could impact commodities in 2020. More recently, the coronavirus has also introduced new uncertainty.
Lower-for-longer interest rates, global trade tensions, heightened geopolitical rifts coupled with record central bank and investor buying activity, are all supportive of gold in the medium term. On the flip side, the outlook for oil looks more bearish with strong supply growth.
