Many analysts have slashed the price of oil in their forecast to the lowest in the past 16 months, citing the lowering global demand over fears of financial and economic turmoil and the staggering conflict between the U.S. and China regarding the trade war.
The survey of 51 economists and analysts forecast Brent crude LCOc1 would average $65.02 a barrel in 2019, down about 4% from the previous month’s $67.47 projection and compared with the $65.08 average for the global benchmark so far this year, Reuters revealed, Friday.
“The ongoing U.S.-China trade disputes and emanating risk of the economic slowdown will be the key factors affecting prices for the rest of this year and in 2020,” ANZ analyst Soni Kumari said.
“A protracted trade conflict could deepen the economic slowdown and impact demand growth.”
This forecast is the lowest forecast made by analysts on Brent oil prices since March 2018.
Brent oil held above $60 a barrel on Thursday, and as U.S. inventories sharply fell, the West Texas Intermediate (WTI) crude boosts futures. Brent crude, an international benchmark on crude oil prices, was up 2 cents at $60.51 a barrel by 1215 GMT. WTI was up 48 cents at $56.26 a barrel.
The longstanding and stalling negotiations between the U.S., one of the biggest crude oil suppliers in the world, and China, one of the biggest importers of oil, have threatened economic growth and is putting oil prices in check.
“Trade tensions (are) hanging like a dark cloud threatening to rain over oil prices,” said Jeffrey Halley, senior market analyst at OANDA.
“If the API (American Petroleum Institute) unexpectedly supplied bullets to oil bulls on Tuesday evening so that they could fire from all cylinders, the EIA flung the door of the ammunition depot wide open yesterday,” Tamas Varga of oil brokerage PVM said.
Analysts believe that the trade war between the two economic power has been a significant factor for the 20% drop in oil prices from 2019 highs hit in April, with Beijing announcing tariffs on U.S. crude imports last week.