Macro Oils short-term outlook: October 2020 Report

Commodity Market Report 06 October 2020

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Report summary

Uncertainty has left the H2 2020 oil market in stasis amid concerns of how a coronavirus "second wave" winter could impact demand. As we extend our outlook to 2022, the annual average for Brent is forecast at $58 per barrel (nominal), adjusted lower by $2 from the long term forecast of $60 per barrel nominal. In addition, it isn't clear how long Libya's increase in supply can be sustained with the recent easing of the blockage in place since January 2020. Highlights of our Macro Oils short-term outlook include: • OPEC production forecast and assumptions through 2022 • Libya production amidst uncertainty about its duration • Threats to the demand recovery linger as Covid-19 persists • Domestic air travel rebounds in China, product demand recovery diverges in India

Global supply: short term forecast extended through 2022
- Non-OPEC: outlook remains broadly unchanged at top level
- US Lower 48: return to growth in 2022
- Strike action shuts in six fields in Norway
- Outlook extended to 2022: managing declines will be key
- OPEC supply: production rises due to easing of OPEC+ restraint and recovery in Libya
Global demand: Covid-19 persists, threatening the pace of demand recovery
- H2 2020 : Pandemic sets the terms for economic, demand recovery
- 2021 and 2022: Demand to return to pre-crisis levels by Q2 2022
- Regional demand outlooks: China leads the recovery, Europe’s demand under threat
- Asia: Domestic air travel rebounds in China, product demand recovery diverges in India
- Europe: Accelerating new cases of Covid-19 is increasing the risk of stricter lockdowns being re-introduced
- Middle East: National lockdown re-introduced in Israel as the country experiences a surge in new infections.
- US: wildfires keeps pressure on US demand
- Risks to the outlook