As uncertainty continues to rule the market, oil price volatility will remain, and outlooks will err on the side of optimistic caution with no real action.
The two key energy organisations both tightened their forecast this week and in Friday trading, Brent crude was priced below US$45 with West Texas Intermediate (WTI) close to US$42 a barrel.
What the global oil recovery will look like and when will it happen appears to be the million-dollar question.
No-one can be sure, leading both the International Energy Agency and the Organisation of the Petroleum Exporting Countries to trim forecasts for the rest of the year, in their monthly oil reports.
Global supply is plentiful, but demand fundamentals are still out of balance.
The world continues to cut back on travel and activity, so oil demand is suffering as the Covid-19 fallout continues.
The IEF forecasts that we will be struggling to consume around 92 million barrels a day for 2020 after the agency lowered its estimates this week.
That is more than 8 million barrels lower demand than last year with little and slow recovery in sight. The situation is impacted by the return of 2.5 million barrels when the OPEC+ voluntary production adjustment ended, increased US oil production and low demand.
OPEC issued its monthly oil report this week citing “lower economic activity levels,” particularly in some non-OECD countries as a key reason to keep oil demand for 2020 around 90.6 million barrels a day.
While the key focus will be survival for 2020, OPEC sees an increase of 7 million barrels a day in terms of demand for 2021, depending on an assumption “that Covid-19 will largely be contained globally with no further disruptions to the global economy.”
2020 was to be the year where global oil demand should have risen above 100 million barrels a day.