BARCLAYS has raised its oil price forecast amid hopes the market may be starting to recover from the turmoil sparked by the coronavirus.

The banking giant said it expects the Brent crude price to average $37 per barrel this year compared with $31/bbl previously.

The change reflects the bank’s view that the outlook has improved following moves to ease coronavirus lockdowns in countries such as China and the record production cuts agreed by major exporters.

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The Brent crude price fell below $20/bbl for the first time in 18 years last month after the spread of the coronavirus sent demand for oil plunging resulting in a supply glut.

Analysts at Barclays said yesterday: “Market forces have aligned producers around the world to support fundamentals and demand is increasingly showing signs of having troughed.”

The bank reckons the Brent crude price will average $53/bbl in 2021, up $16/bbl from its previous estimate.

Barclays slashed its Brent crude price forecast for 2020 by $12/bbl in late March, to $31/bbl, shortly after Boris Johnson imposed the lockdown in the UK.

The latest change will be welcomed in the North Sea.

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Industry leaders warned last month that the fall in the crude price this year and the logistical challenges resulting from the coronavirus had left the sector at “breaking point”.

However, even if Barclays forecast proves to be accurate, the North Sea industry is likely to face another long downturn. Firms in the area were hit hard by the slowdown triggered by the plunge in the crude price between 2014 and 2016.

Barclays warned the impact of the coronavirus will be felt for some time.

“The sheer size and speed of the disruption and associated inventory overhang will take time to get fully absorbed,” it said.

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Brent crude fetched around $70/bbl in January.

It sold for $32/bbl yesterday afternoon, up $0.87 on the day.

In April Opec + countries including Saudi Arabia and Russia agreed production cuts totalling 9.7m barrels per day, which took effect this month.

On Monday Saudi Arabia said it would its production by a further 1m barrels daily from June.

Thousands of US shale wells have been shut in on economic grounds in recent weeks.