Baku, Azerbaijan, Feb. 24
By Aygun Badalova - Trend:
Fitch Ratings has lowered the oil and natural gas price assumptions, expecting that the prices are increasingly unlikely to recover in 2016, according to the agency's report on Feb.24.
Fitch expects Brent and WTI prices to average $35 a barrel in 2016, compared to $45 a barrel previously forecasted.
Fitch also assumes a Henry Hub natural gas price of $2.25 per thousand cubic feet for the year compared to previously expected 2.50 per thousand cubic feet.
Long-term base case price assumptions of Fitch are unchanged at $65 a barrel and 3.25 per thousand cubic feet.
The reduction is due to a combination of stock build-up over the mild winter, higher-than-expected OPEC production in January and increasing evidence that global economic growth for the year will be weaker than we previously forecast, Fitch said in a report.
"This suggests there will still be a supply surplus in the second half of 2016, albeit reduced from current levels, and that markets will probably only reach a balance in 2017. Even then, very high inventories will limit price increases," the report said.
According to OPEC's monthly report, released on Feb.10, cartel's 13 members produced 32.335 million bpd in January, about 130,700 bpd more than December 2015.
Crude oil output increased mostly from Nigeria, Iraq, Saudi Arabia and Iran, while production showed a decrease of from Angola, Venezuela and Algeria.
Oil prices fell four percent after Saudi Arabia's oil minister Ali Al-Naimi ruled out any production cuts, saying the kingdom's rationale on maintaining output was that demand would pick up any excess supply.
Brent crude was down to $32.51 a barrel, while WTI fell to $30.93.