ECONOMY


Moody's cuts 2016 oil price outlook by $10

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Baku, December 16, AZERTAC

Moody's Investors Service on Tuesday slashed its 2016 oil price outlook on expectations of a prolonged supply glut, saying additional production from Iran, should sanctions be lifted, would offset any slowdown in output from the United States, according to Reuters.

The ratings agency cut its 2016 Brent price assumption by $10 to $43 per barrel and its WTI price forecast by $8 to $40.

Prices for both benchmarks would increase by $5 per barrel in 2017 and again in 2018, Moody's said in a note.

The agency raised its forecast for growth in global oil demand, saying it would increase by 1.3 million barrels in 2016 on higher consumption in the United States, China, India and Russia.

A supply-demand balance would be reached at a Brent price of $63, but only at the end of the decade, Moody's said.

The agency maintained its negative outlook on the oilfield services and integrated oil and gas, exploration and production sectors. Apart from increased exports from Iran, this outlook also reflected the possibility of less demand from China due to a slowdown in its economy.

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