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Oil Update—July 2020

For August, I am extending my July forecast for West Texas Intermediate of $35 to $45 per barrel.

I was hoping the world environment would encourage a higher forecast for August, but, with the increase in the number of new COVID-19 cases worldwide, I decided to be cautious. As stated last month, I expect governments and people will learn to cope with the coronavirus, numbers have increased faster than I expected. The question is whether people will adopt measures to help reduce the spread of the virus—such as social distancing and wearing masks. If so, I hope further lockdowns are unnecessary. According a Wall Street Journal article “U.S. Leads the Globe as Coronavirus Deaths Pass 150,000, Hospitalizations Rise” (subscription required), new cases might be declining.

“Where you limit transmission, you’re going to limit the death toll,” Dr. Fortune said Wednesday.

The U.S. seven-day average of deaths is about 1,019, according to the Journal’s analysis, but the 14-day average is lower, at around 914. For new cases, the seven-day average is about 64,684, less than the 14-day average of around 65,745, suggesting that new cases are on the decline.

The deaths haven’t mounted as quickly during the latest surge in cases as they did during the initial wave in the spring. The U.S. went from a handful of deaths to 100,000 deaths from late March to late May—and topped 125,000 (subscription required) a little over a month ago. The country ranks 10th in the world in deaths per 100,000 people, according to Johns Hopkins.

As an aside, I enjoy following the travails of Mark Wallace, an excellent photographer, as he treks about the world on his motorbike. In a recent blog post “Quarantined in Argentina,” he detailed how he was affected by their protocols. While I enjoyed reading about his experiences, I also enjoyed viewing his photography.

I hope that the worst of the coronavirus is behind us and that we can begin to meaningfully progress to bringing the number of cases down across the globe. If that situation occurs, then oil might continue its upward path.

To reiterate, I expect West Texas Intermediate oil prices to range between $35 and $45 per barrel for August.

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