Calling time on the oil price rally

Our forecast of sluggish global growth, further increases in US output and a rise in investor risk aversion suggests that the recent rally in oil prices will prove short-lived. In contrast, we think that demand for natural gas and LNG will defy the downturn in economic activity and give some support to prices. Elsewhere, we forecast that the price of Pacific coal will stabilise, after its recent sharp fall, as policy stimulus in China props up demand. In 2020 and 2021, we are more optimistic on oil and US natural gas prices as we expect the Fed to cut interest rates leading to a revival in demand and risk appetite.