Analysts have slashed their oil price forecasts to the lowest in more than 16 months, citing softening global demand as an economic slowdown looms and uncertainty prevails on the US-China trade front, a Reuters poll showed on Friday.
The survey of 51 economists and analysts forecast Brent crude would average $65.02 a barrel in 2019, down about 4% from the previous month's $67.47 projection and compared with the $65.08 average for the global benchmark so far this year.
It is also the lowest 2019 average forecast for Brent since March 2018.
The 2019 outlook for West Texas Intermediate crude futures was cut to the lowest since January 2018, at $57.90 per barrel, below last month's $59.29 forecast. WTI has averaged $57.13 this year.
"The ongoing US-China trade disputes and emanating risk of economic slowdown will be the key factors affecting prices for the rest of this year and in 2020," ANZ analyst Soni Kumari said.
"A protracted trade conflict could deepen the economic slowdown and impact demand growth."
The trade row between the world's top two economies has been a major factor behind a roughly 20% drop in oil prices from 2019 highs hit in April, with Beijing announcing tariffs on US crude imports last week.
The price drop has dampened the impact of production cuts led by the Organization of the Petroleum Exporting Countries, with a few analysts saying the group could extend the curbs beyond 2020.
"Typically, cartels are less stable when prices are under pressure and members are fighting for market share. Opec should be no exception to this rule," Hamburg Commercial Bank chief economist Cyrus de la Rubia said.
Meanwhile, global demand was forecast to grow by 0.9-1.3 million barrels per day in 2019, versus July's 0.8-1.4 million bpd projection.
The US Energy Information Administration, the International Energy Agency and Opec downgraded their 2019 demand growth forecasts in August.
"Demand is set to contract in the developed countries while it grows ever more slowly in emerging countries," said Norbert Ruecker, head of economics and next-generation research at Swiss bank Julius Baer.
"While we see aggressive monetary policy ending the downturn and prolonging the economic cycle, next year's expected growth rates are too lacklustre to lift oil demand meaningfully."
Oil could get limited support from tensions in the Middle East, US sanctions on Iran and Venezuela, and slower-than-expected growth in US output, even with new pipelines from the US Permian basin easing a supply bottleneck, analysts said.
"While we expect trade tensions between the US and China to intensify, and global growth to slow further, we think oil markets may be overreacting to the bad news on demand, and seem to have lost focus on the constrained backdrop for supply," said Oliver Allen, economist at Capital Economics.
Additionally, crude prices could get a one-off boost from International Maritime Organization rules taking effect next year that will ban ships from using fuels with a sulphur content above 0.5%, survey respondents said.
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