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According to NAB economists, in annual average terms, US dollar denominated commodity prices are forecast to fall by 16.2% this year, driven by a drop in LNG.
Throughout April NAB expects Brent prices to remain subdued at US$32 a barrel, and West Texas Intermediate to sit at $25/bbl.
NAB's forecast for the remainder of the year still looks overcast, with Brent expected to rise to just $46/bbl in December. The oil price won't recover back to the $60/bbl mark until December 2021, according toWHICH analyst.
RBC Capital Markets, by contrast, suggested in late March a $42/bbl oil price in the mid term.
While the OPEC+ agreement over the Easter break will see cuts of around 10 million barrels of oil per day till June, NAB expects this will only offset some of the demand destruction brought about by the COVID-19 pandemic, expected by some at around 30MMbopd.
More crude is being stored offshore on tankers, but further storage capacity is limited.
There is no clear opportunity NAB can see that will offset falling demand.
LNG will also take a hit, as COVID-19 "crimps LNG demand," according to NAB analysts.
"The LNG market had issues of excess supply prior to Covid-19. A number of projects such as Woodside Petroleum's Scarborough and Browse projects have been put on hold," NAB said.
"We have further lowered our export volume and, more so price forecasts, although a weaker Australian dollar should help."
NAB's outlook mirrors that provided by ANZ's Commodity Insight yesterday, which stated that after four days of intense OPEC+ negotiations, the cuts to production would not be enough to counter demand declines.
"The devil is always in the detail," ANZ senior commodity strategist Daniel Hynes wrote.
The baseline numbers OPEC+ agreed to are higher than levels they were producing at the start of the year.
"For example, Saudi Arabia was producing 9.8mb/d in February, which then increased to 12.3mb/d this month. However, with its baseline number set at 11mb/d, it is only effectively reducing output by 1.3mb/d to 8.5mb/d," Hynes said.
ANZ also predicts adherence to quotas to be "scant" and warned that the cuts were non-binding and effectively driven by market forces.
"[While the cuts] should help support prices in the short term, and it significantly reduces the risk of prices dropping into the teens… the main issue is that it still falls short of the hit to demand in the short term."
Despite oil and gas being a primary export for Australia, the International Monetary Fund expects economic growth in Australia to rebound despite the global economy's woes.
The IMF forecasts the global economy to fall by 3% in 2020 which compares to a fall of 0.1% in 2009 at the height of the GFC. It however expects Australia to grow by 6.1% in 2021.