Rystad Energy has cut its 2020 Brent crude oil price forecast from nearly $60 per barrel to around $56 per barrel.
In addition to the cut, the company warned that another negative revision “might be around the corner” due to increasing downside risk.
“Brent has come under renewed downwards pressure this week, trading below $55 per barrel as news of rising numbers of coronavirus cases across the world have spooked market participants,” Rystad said in a company statement.
“Rystad Energy’s latest crude oil market balances suggest that the epidemic’s net impact on oil demand could create almost the same amount of surplus crude barrels during the second quarter of 2020 as it will in first quarter of the year,” Rystad added.
The company said the surplus may amount to nearly 1.8 million barrels per day without any additional production cuts in the market, “assuming Libya’s production returns to normal during the second quarter”.
“Rystad Energy therefore sees additional downside risk to crude prices from today’s $55 levels during the second quarter, unless at least one million barrels per day are removed from the quarter’s market balances,” Rystad stated.