A prominent investment bank has slashed its oil price forecast amid concerns about the outlook for global growth.
Bank of America Merrill Lynch(BofA) said it expected the Brent crude price to average $54 per barrel.
Last week the bank predicted that Brent would fetch an average $62/bbl this year.
Concerns about environment will fuel oil price rises predicts investment bank
The cut may be regarded with concern in the North Sea oil and gas industry. This was hit hard by the fallout from the slump in the crude price from $115/bbl in June 2014 to less than $30/bbl early in 2030.
Cuts in production by Opec members and Russia since late 2016 triggered a partial recovery in the crude price, which has fuelled a modest upturn in North Sea activity.
But the price has fallen from around $70/bbl late last year to just $50.60 yesterday afternoon amid concern about the implications of the coronavirus outbreak.
Bank Of America Merrill Lynch seems to have become much less bullish on the outlook for crude after a surge in the number of cases around the world.
Announcing the change to its forecast yesterday, the bank noted that growth in global gross domestic product was fading, without elaborating.
Oil price warning bodes ill for North Sea
In a BofA Global Research report issued last week, it said said prices appeared to be becoming anchored around $60/bbl.
The bank noted then that cuts in spending by US shale companies could offset the effects of coronavirus risks.
Experts at the bank still think cuts in production by Opec countries and slowing growth in US shale output will provide some support for prices this year. However, these factors may not prevent a marked fall in the average crude price this year.
The bank predicted yesterday that the Brent crude price would fall to $48/bbl in the second quarter before rising to $58/bbl in the fourth quarter.
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