The coronavirus pandemic is hastening a structural change in aggregate demand for oil, reducing the oil industry's need to develop higher-cost reserves for reinvestment to support production levels and growth in the next three to five years.
Moody’s has reduced its medium term oil price assumptions to US$45 - $65/bbl, down from US$50 - 70/bbl. The price range reflects Moody’s view that oil prices will remain highly volatile, with periods outside the top or bottom ends of the range. Geopolitical issues or attempts to manage supply by the OPECplus group of oil-producing nations will also lead to price fluctuations from time to time.
Key takeaways from a new report include:
- Recovery in oil demand will be more subdued than overall GDP growth.
- Assuming a gradual economic recovery starting in the second half of 2020, the International Energy Association (IEA) estimates that by late 2020, world oil demand will return to levels some 6.5 million bpd, or 6% below pre-crisis levels.
- The coronavirus lockdowns have effectively set up a real-time experiment over the digitisation of services, possibly bringing permanent changes in the nature of work in service industries, while reducing both business travel and commuting.
Read the article online at: https://www.worldpipelines.com/business-news/28052020/moodys-oil-prices-to-remain-highly-volatile/