Oil Price Fundamental Daily Forecast

Daniel Fowler
March 25, 2020

But some analysts struck a note of caution, as demand continues to decrease with more countries imposing lockdowns to curb the spread of COVID-19 while Saudi Arabia and Russian Federation are also no closer to ending their price war.

ING revised down on Wednesday its Brent crude price forecast for the second quarter to $20 a barrel from $33, because of the demand shock caused by the coronavirus outbreak and the expected supply surge from Saudi Arabia and Russian Federation in April.

Oil prices extended falls for a third session on Wednesday.

Global benchmark Brent crude was up 2.9 per cent to trade at almost Dollars 28 per barrel, while U.S. benchmark West Texas Intermediate rose 3.5 per cent to almost USD 25 per barrel.

"No one has a handle of how much the world will come to a halt", said Edward Moya, senior market analyst at OANDA in NY.

Canada seems to be few days away from running out of storage for its local oil production, and other countries may follow trend in a coming months.

British investment bank Barclays said it has reduced its Brent and WTI price forecasts by $12 per barrel for 2020, noting that they are now below both the curve and consensus. Gasoline futures, meanwhile, soared over 30% earlier in the session and were trading up around 24%.

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The Fed on Monday rolled out programs including backing for corporate bond purchases for the first time.

US senators and Trump administration officials have reached an agreement on the $2 trillion stimulus bill which is expected to be passed through the Congress later on Wednesday.

Oil prices have fallen 45% so far this month after the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russian Federation, a grouping known as OPEC+, failed to extend an agreement to cut production and support prices beyond end-March.

"Although oil futures are getting a sentiment-led boost this morning, the challenge for the physical oil market is a looming and growing oversupply which will cause a "nowhere to hide" situation very soon", said Bjornar Tonhaugen, head of oil markets at Rystad Energy.

The latest round of weekly US oil reports are expected to show crude inventories rose for a ninth straight week.

Industry group the American Petroleum Institute (API) was scheduled to release its supply report on Tuesday at 4:30 EDT (2030 GMT), followed by the US government's figures on Wednesday.

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