Baku, Azerbaijan, Nov.29
By Leman Zeynalova – Trend:
Oil supply and demand are expected to be broadly balanced in the first half of 2017, with a move to a more pronounced deficit from the second half of 2017, said the report posted on the website of Fitch Ratings.
But the still-high commercial inventories may delay any significant price response, according to the report.
Therefore, Fitch Ratings has maintained its base-case assumption that the prices for both Brent and West Texas Intermediate (WTI) will average $45 per barrel in 2017.
“We have also maintained our $55/barrel assumption for 2018 and introduced a 2019 price expectation of $60, reflecting our belief that it may take longer to fully return to our long-term equilibrium price of $65/barrel,” said the report.
However, Fitch Ratings believes that there is significant uncertainty about the future of oil prices.
“Unprecedented capex cuts could translate into a far sharper fall in output than the consensus expectation, while there is also potential for demand growth to slow if economic growth disappoints or for supply to be higher than expected if US shale comes back strongly as prices rise,” said the report.
The price assumptions of Fitch Ratings do not factor in any impact from a possible OPEC production cut agreement during its meeting scheduled for 30 November.
“This is because even if a deal is agreed, its ability to have a lasting impact on prices is unclear and will depend on the size of the cuts and the willingness of members to stick to them,” said the report.