(Reuters) - Commerzbank cut its end-2019 Brent oil price forecast by $5 to $65 a barrel on Tuesday, citing a gloomy demand outlook amid heightened trade tensions between the United States and China.
“There are growing fears among market participants that an escalating trade war could put the brakes on oil demand in both countries,” analysts at the bank said in a note.
The lender forecast Brent to average $65 a barrel in 2019 and 2020 and WTI to average $57 and $62 in the same periods.
A protracted dispute between the world’s biggest economies has taken a toll on global financial markets, with U.S. President Donald Trump saying last week he was not ready to make a deal with China.
The International Energy Agency (IEA) last week lowered its global demand growth forecasts for 2019 and 2020 to 1.1 million and 1.3 million bpd respectively.
However, global demand was likely to weaken less significantly than the current price trends suggest and Saudi Arabia could further curb production, Commerzbank said.
Oil prices slipped on Tuesday to about $58.12 a barrel, having shed more than 20% since hitting a 2019 year high in April.
Reporting by Eileen Soreng and Asha Sistla in Bengaluru; Editing by Jan Harvey