Oil set for fragile recovery as economies limp towards
normal: Reuters poll
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[July 31, 2020] By
K. Sathya Narayanan
(Reuters) - Oil prices are set for a slow
crawl upwards this year as the gradual easing of coronavirus-led
restrictions buoy demand, although a second COVID-19 wave could slow the
pace of recovery, a Reuters poll showed on Friday.
The survey of 43 analysts and economists forecast benchmark Brent crude
<LCOc1> to average $41.50 a barrel in 2020, up slightly from the $40.41
consensus in last month's survey and compared with around $42 average
for the benchmark thus far this year. It is expected to average $49.85
in 2021.
The 2020 outlook for West Texas Intermediate <CLc1> rose to $37.51 per
barrel from June's $36.10.
Graphic: Monthly oil price forecasts -
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gfx/mkt/rlgvdnxxwvo/July%20oil%20poll%20chart%201.PNG
Oil is "caught-up in a step-wise re-balancing process" with the "pieces
moving in the right direction" on the supply side, said Harry
Tchilinguirian, head of commodity research at BNP Paribas.
"It's in demand recovery where the uncertainty lies, with COVID-related
developments generating concerns that the pace of re-opening may be
impeded."
The poll projected global demand to contract by between 7.2 and 8.5
million barrels per day (bpd) this year, versus last month's 6.5-8.7
million bpd prediction.
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Crude oil storage tanks are seen in an aerial photograph at the
Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020.
REUTERS/Drone Base/File Photo
Graphic: Global oil demand estimates -
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gfx/mkt/xklpydmmzvg/July%
20oil%20poll%20chart%202%20(002).PNG
A promising vaccine for the virus could, however, fast-track economic recovery
and in turn boost oil prices, analysts said.
"A breakthrough of the $40-$45 range is possible if the comeback of the global
economy will be faster and stronger than expected," LBBW analyst Frank
Schallenberger said.
The International Energy Agency raised its 2020 demand forecast earlier this
month to 92.1 million bpd.
Brent prices have rebounded sharply since plunging to an over 20-year low in
April, helped by production cuts by OPEC and its allies starting in May, apart
from the gradual lifting of lockdowns, prompting the producer group to decide on
easing the record supply reductions from August.
"The decision to ease curbs provides them (OPEC) with an easy solution to
reverse them if the demand recovery suddenly stalls," said OANDA senior market
analyst Edward Moya.
(Reporting by K. Sathya Narayanan in Bengaluru; editing by Arpan Varghese and
David Evans)
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