FXStreet reports that ABN AMRO’s oil price forecast has been revised lower again due to coronavirus-related measures and a much bigger oil demand shock while a high build of inventories will cap much of the upside potential for oil prices.

“We see a sharp drop in global demand. This is leading to higher inventories. The impact on supply will come with a delay. This combination will keep oil prices under pressure and cap upside potential.”

“Our Q2 forecast is similar to the 2016 lows. Further, downside could be seen, but will be temporary. In line with the economic recovery in H2, oil prices are expected to recover in H2 as well.” 

“Due to oversupply and even bigger inventories, the upside potential may be limited to USD 50/bbl in 2021.”

The U.S. Energy Information Administration (EIA) revealed on Wednesday that crude inventories rose by 1.954 million barrels in the week ended March 13. Economists had forecast an increase of 3.256 million barrels.

At the same time, gasoline stocks declined by 6.180 million barrels, while analysts had expected a drop of 2.890 million barrels. Distillate stocks fell by 2.940 million barrels, while analysts had forecast a decrease of 1.963 million barrels.

Meanwhile, oil production in the U.S. grew by 100,000 barrels a day to 13.100 million barrels a day.

U.S. crude oil imports averaged 6.5 million barrels per day last week, up by 127,000 barrels per day from the previous week.