Baku, Azerbaijan, Jan.26
By Emil Ismayilov - Trend:
Fitch Ratings has revised its base case price deck downward for crude oil to reflect continued expected market weakness near term, said the message distributed by the agency.
It is reported that both base case West Texas Intermediate (WTI) and Brent are affected.
"For 2015, Fitch has revised its base case price deck to match its stress case price deck which is $50 per barrel for WTI ($55 Brent)," said the message.
In its turn, for 2016, the base case price deck for crude has been lowered to $60 for WTI ($65 Brent). This downward revision stems from the potential for a protracted downturn in prices beyond calendar 2015.
Long-term base case price deck assumptions for crude remain unchanged at $75 per barrel for WTI ($80 Brent) which Fitch believes still remains the marginal cost of full cycle production.
"Ultimately, Fitch expects a supply response due to capital expenditure cuts that will result in less drilling and cause prices to revert toward Fitch's long-term base case price assumption," said the message.
Last year was quite recessionary for the world economy, which is associated with a significant decline in oil prices. This process began since the spring of 2014 and has further accelerated in the summer. Reduction of prices is still going on. Currently, the price per barrel of oil (depending on variety) on the world market is below $50, whereas prior to the collapse, its value exceeded $110 per barrel.
Azerbaijan's state budget for 2015 is formed on the basis of the oil price of $90 per barrel compared to $100 in 2014.
The average price for AZERI LT, exported from Azerbaijan via the Ceyhan, Batumi and Supsa ports to Italian Augusta port, was $49.69 per barrel on Jan.19-23 or by $0.48 more than the previous week.
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