Moody Slashes Oil Price Forecast

Moody’s sharply lowered its oil price assumptions on Tuesday, amid a threat of a prolonged oversupply.

On Tuesday morning, Moody’s Investors Service said it had “significantly lowered” its price assumptions for Brent crude and West Texas Intermediate crude as continued high levels of production by global oil producers have “significantly exceeded” growth in oil consumption.

Moody’s lowered its price assumption in 2016 for Brent crude oil, the international benchmark, to $43 from $53 per barrel and for West Texas Intermediate (WTI) crude, the North American benchmark, to $40 from $48 per barrel.

Looking further ahead, the rating’s agency expected both Brent and WTI prices to rise $5 per barrel in 2017 and 2018.

Those prices seem a far cry from current levels, however. On Tuesday, WTI was trading at $36.22 and Brent crude at $37.75. Oil prices have been battered by a glut in global supply, mainly caused by record production by OPEC nations, and demand failing to keep up.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza