Oil prices will be hemmed in the $40-45 per barrel range for the rest of the year, a Reuters poll showed on Friday, with analysts expecting a rough road to recovery into 2021 as an accelerating coronavirus outbreak fans renewed demand concerns.
A survey of 41 economists and analysts forecast global benchmark Brent crude prices LCOc1 to average $42.32 a barrel in 2020, slightly down from the $42.48 forecast in the previous poll and the $42.45 average so far this year.
The outlook for 2021 was also reduced to $49.76 a barrel from last month's $50.41 consensus.
A resumption in Libyan supply could further pressure prices, analysts said, while markets are bracing for the Nov. 3 U.S. elections.
"The two major factors remaining in 2020 that could break the current range are the U.S. elections and surprisingly good vaccine news," said David Olzant, an analyst at Raiffeisen.
"A Biden victory could spark supply-side worries over shale, but also a more lenient policy regarding Iran could spark oversupply fears," he added.
The survey forecast U.S. WTI crude futures CLc1 to average $38.53 a barrel in 2020, versus September's $38.70 consensus.
"In the U.S., production has recently been increased again, and with a further stabilization of the situation in Libya, an important oil exporter could regain its former strength," said Commerzbank analyst Carsten Fritsch.
Graphic: U.S. crude oil production and rig count
Clouding the outlook further, the Organization of the Petroleum Exporting Countries (OPEC) and its allies plan to increase production by 2 million barrels per day from Jan. 2021 after record output cuts earlier this year.
But a second COVID-19 wave is slowing demand and will complicate efforts by producers to balance the market, the International Energy Agency said. [O/R]
While a recovery in demand would continue, it will be uneven and at a slower pace over the coming months, until an effective vaccine becomes widely available, said UBS analyst Giovanni Staunovo.
Graphic: Global oil supply and demand