(Reuters) - Morgan Stanley has lowered its oil price forecasts for
the rest of the year citing a weaker economic outlook, faltering demand
and higher shale growth that could offset OPEC’s efforts to support the
market.
“The slowdown in oil demand growth that started in early
2019 has not come to an end yet,” the bank said in a note published on
Tuesday. “Demand growth has softened as global economic growth has
slowed.”
The U.S. bank cut its 2019 Brent price forecast to $60
per barrel from $65, and cut its WTI outlook for the third and fourth
quarters of this year to $55 from $58 previously.
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It
also lowered its 2019 oil demand growth outlook to 800,000 barrels per
day (bpd) from 1 million bpd, and its 2020 forecast to 1 million bpd
from 1.4 million bpd.
“More cuts would be required in 2020 if
Organization of the Petroleum Exporting Countries (OPEC) were to balance
the market. Much depends on demand growth next year, but on our current
estimates the ‘call on OPEC’ is about 1 million bpd below current
production in 2020,” analysts said.
Crude oil prices have fallen
about 20% from 2019 highs hit in April, in part due to an escalating
trade war between the United States and China, which is seen hurting the
global economy and in turn, demand for oil.
Other banks have also flagged risks to oil demand growth due to economic uncertainties.
Last
month, Barclays cut its oil price forecasts for the second half of this
year and 2020, saying it expected slower demand growth due to a
weaker-than-expected global macroeconomic backdrop.
Reporting by Brijesh Patel in Bengaluru; editing by Jason Neely
Our Standards:The Thomson Reuters Trust Principles.
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