(Reuters) - Oil prices will be pressured this year as the spread of coronavirus takes a toll on the global economy and demand, overshadowing OPEC’s efforts to curb production to support the market, a Reuters poll showed on Friday.
The survey of 42 economists and analysts forecast Brent crude would average $60.63 a barrel in 2020, down about 5% from the previous month’s $63.48 projection.
The global benchmark has averaged $59.80 so far this year.
Oil has shed nearly 30% from January highs, with U.S. crude dropping below $50 a barrel after the virus hit demand in China, the world’s top oil importer, and sparked concerns about excess global supply.
“In the first quarter, we expect economic disruptions caused by the outbreak to weigh heavily on oil demand and prices,” Capital Economics analyst Caroline Bain said.
Crude prices fall as coronavirus cases rise here
A further production cut by the Organization of the Petroleum Exporting Countries and its allies led by Russia, expected to be announced in Vienna on March 5-6, would do little to cushion the market from the virus impact, analysts said.
Of the 37 contributors who participated in both the January and February polls, 25 cut their 2020 Brent forecasts.
Analysts expect global oil demand to grow by about 0.7-1.1 million barrels per day (bpd) this year, compared with last month’s prediction of 0.8-1.5 million bpd.
The U.S. Energy Information Administration lowered its 2020 demand growth forecast to 1 million bpd from 1.3 million bpd.
OPEC production vs. world demand here
“Demand growth is likely to take a hit from the impact on transportation from the epidemic and a milder winter. This will likely result in an oversupplied oil market in Q1,” UBS analyst Giovanni Staunovo said.
Oil could stage a slight recovery, especially towards the second half of 2020, although that would be contingent on how fast the virus situation eases, analysts said.
“Prices could recover ground over the next months driven by OPEC+ commitment to maintaining global markets close to balance, the threat of U.S. sanctions against Russian crude producers and persisting supply disruptions in several countries, including Libya,” Intesa Sanpaolo analyst Daniela Corsini said.
Prices may find further support from a moderate slowdown in U.S. shale output, some analysts said.
While the EIA forecast U.S. crude production to rise to a record 13.2 million bpd this year, the agency expects the rate of growth to slow into next year.
The poll forecast U.S. light crude to average $55.75 a barrel in 2020, down from the $58.22 consensus in January.
“We expect U.S. oil production growth to fall to 2% in 2020, following two consecutive years of double-digit growth, as companies continue to cut back on investment in the context of softening oil prices,” Economist Intelligence Unit analyst Cailin Birch said.
Reporting by Brijesh Patel in Bengaluru; editing by Arpan Varghese, Noah Browning and