(Reuters) - Barclays Commodities Research said on Thursday oil prices could see a correction in the near-term if a recovery in fuel demand slows further, especially in the United States.
While a recent rally has been supported by faster-than-expected rebalancing of supply and demand as countries reopen their economies, producers cut production and the U.S. dollar weakens, “we are not there yet in terms of fundamentals for the next leg higher,” analysts at the bank said in a note.
Benchmark Brent crude prices LCOc1 have rebounded to around $44.50 a barrel, after plunging in April to $15.98, the lowest since 1999. [O/R}
However, gains have been tempered over the past couple of days by a surprise build in U.S. crude oil stocks, while a surge in new coronavirus cases continued to dampen a recovery in fuel demand.
The bank lowered its oil market surplus forecast for 2020 to an average 2.5 million barrels-per-day (bpd), from 3.5 million bpd previously.
“We expect a continued supply deficit in oil markets to normalize inventory levels by the end of next year,” the bank said, adding, prices could potentially spike if demand recovers more quickly than expected.
The bank also said that it remains constructive on prices for 2021, forecasting $53 and $50 for Brent and WTI, respectively.
Barclays expects Brent to average $41 in 2020 and WTI to average $37.
The bank lowered its demand estimates for next year, citing the continued spread of the coronavirus in key consuming countries, especially the United States.
Reporting by K. Sathya Narayanan in Bengaluru; Editing by Kim Coghill