Daily Management Review

Citi downgrades Brent barrel price forecast for Q1 due to coronavirus


American Investment Bank Citigroup Inc. lowered its forecast for the cost of Brent crude oil in the first quarter of 2020 to $54 dollars per barrel from the previously expected $69, Bloomberg writes with reference to the bank.

Thus, the forecast decrease was 22%. Citi also lowered its forecast for Brent crude oil in the second quarter to $ 50 from $ 68, and in the third to $ 53 from $ 63.

In addition, the bank admits that the cost of a barrel of Brent could collapse to $ 47, which would be the lowest in two and a half years.

"The decrease in forecasts for the next two quarters is based on the bank's idea that the effect of the virus will be longer and stronger than previously thought," the agency writes. At the same time, the bank revised its forecast for Brent price for the fourth quarter of up to $58 from $ 57 per barrel.

January was the worst for the oil market since 1991, when quotes fell 26% in a month. Over the past January, Brent oil futures fell by 15.5% - from the level of $ 66 per barrel to levels below $ 56 at auction on Friday.

This drop in oil prices can be explained by the rapid spread of coronavirus outside of China. According to the latest data, the number of people infected with coronavirus in China exceeded 17.2 thousand people, 361 died. Investors fear the negative impact of this situation on the entire world economy and oil demand.

source: bloomberg.com