U.S. | Oil Prices Outlook. April 2020

Summary

Oil prices will remain very low in 2Q20, but will recover in 2H20 as the worst of the pandemic is left behind. Even though the global economy will be boosted by fiscal and monetary support, prices will remain subdued.

Key points

• Key points:
• OPEC+ could accelerate committed output cuts and consider new ones
• Although oil demand will most likely recover in 2H20, it will remain weak as the global economy takes time to return to pre-COVID19 levels
• In the U.S., the market for WTI crude has been severely dislocated as demand has plunged and stocks are reaching capacity
• Government intervention could help alleviate some of the pressure; however, a new wave of bankruptcies and consolidation in the shale industry seems likely
• Risks are tilted to the downside: inventory accumulation, uneven control of the pandemic across regions, duration and magnitude of the economic fallout and uncertainty on the implementation of output cuts

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