Morgan Stanley said in a research note that escalating trade tensions and a global economic slowdown, in addition to drop in oil demand, will result in lower oil prices.
The bank slashed its oil demand forecast for 2019 from 1.2 million barrels per day to one million barrels per day. That said, it also lowered the Brent price forecast for 2019 between $60 and $70 per barrel, from $75 to $80 per barrel
Morgan Stanley analysts said in a note, “Demand is weakening much more rapidly than we had expected. Considering recent data, both specific to the oil market as well as macro-economic, this seems increasingly likely.”
The data on oil demand for March and April has been upsetting. According to the report, United States, Japan, South Korea, Australia, China, India, Brazil, and Thailand collectively ‘account for 48% of global oil demand’.
“Our expectation had been that falling OPEC supply, driven by further declines in Iran and Venezuela, combined with demand growth in-line with recent trends, would keep the oil market in deficit,” Morgan Stanley said.