Baku, Azerbaijan, Dec. 15
By Elena Kosolapova - Trend:
Moody's international rating agency sharply reduced its oil price assumptions in light of continuing oversupply in the global oil markets, the agency said in its report released on Dec. 15.
In 2016 average price for Brent oil is expected at $43 per barrel, and for WTI at $40 per barrel. For Brent, this marks a $10 per barrel reduction from Moody's previous assumption, and for WTI, a $8 per barrel reduction.
The rating agency expects that Brent oil will increase in price to $48 per barrel in 2017 and $53 per barrel in 2018. WTI is forecasted to reach $45 per barrel in 2017 and $50 per barrel in 2018.
Moddy's also reduced significantly its medium-term price assumptions, to $63 per barrels for Brent and $60 per barrel for WTI.
"The medium-term price assumptions reflect our view that supply/demand equilibrium will eventually be reached around $63 per barrel for Brent, but only at the end of the decade," the rating agency said.
Such a price would support some development of the world's most expensive oil- from oil sands and deepwater resources-in an environment where development costs are lower than in recent years, the report said.
Moody's have also reduced its stress-case scenario oil price assumptions to $30 per barrel for WTI and $33 per barrel for Brent.
Moody's noted that OPEC and many non-OPEC oil producers continue to produce without restraint as they battle for market share and increased production has vastly exceeded growth in oil consumption, including from major consumers like China, India and the US.
Moreover the potential lifting of Iranian sanctions could add significant supply to the market in 2016, offsetting or even exceeding expected declines in US production, the agency said.
Edited by SI
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