Amid deeper global economic contraction-induced lower demand for oil products, Moody’s Investors Service downgrades near-term oil price forecasts for West Texas Intermediate (WTI) and Brent.
“Exceptionally weak short-term prices will persist until production drops enough to ease the strain on storage facilities already operating at or close to full capacity.
Significant supply adjustments in due course should help to balance the market later in 2020, but the pace of the market's rebalancing and rising oil prices will depend on demand recovery.
Moody's price assumption for WTI, the North American benchmark crude is now US$30 per barrel (bbl) for 2020 and US$40 in 2021.
For the main international crude benchmark Brent, Moody´s sees prices averaging US$35 per bbl this year and US$45 in 2021, while oil production will decline in 2020-21 because of both the agreed OPEC+ deal and production shut-ins in the US and Canada.
Moody's expects production cuts to gather speed in the second half of 2020.”
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