UBS Bank on Monday sharply worsened the forecast for oil rates and expects global demand to drop by 5-10 million barrels per day in March at annual rate, since coronavirus has deteriorated global supply chains and exacerbates the supply excess provoked by the collapse of the OPEC+ deal with regard to supply cuts.
UBS downgraded its forecast for North Sea crude oil Brent and U.S. West Texas Intermediate (WTI) through June 2020 to $20 per barrel from $30 and $ 28 per barrel, respectively.
The bank also lowered its forecasts for the end of Q3 and the end of the year.
Since the beginning of the year, oil prices have fallen by 60 percent amid the spread of coronavirus and the statements of Saudi Arabia and Russia in early March about their intention to increase production after the three-year agreement termination between them and other major oil producers on output cuts.
According to UBS analysts, demand in 2020 will decrease by 2.5–3 million barrels per day on annual basis, and the world’s available inventories will amount to 900 million barrels.
Recall, oil prices and demand forecasts previously have worsened already such banks as Goldman Sachs and Bank of America.
As for the oil prices on Monday, Brent international benchmark eased by 3.19 percent, to $26,16 per barrel, while the U.S. WTI indicator added 2.21 percent, to $23,23 per barrel at 1011 GMT.