Moscow. December 15. International rating Agency Moody’s Investors Service downgraded 17% of the forecast price for oil in 2016.
Analysts now expect mark WTI in the next year will cost $40 per barrel versus the earlier forecast of $48 per barrel. Score for Brent was reduced to $43 per barrel to $53 per barrel, according to MarketWatch.
“The growth of consumption will not match the increase in supply,” said senior Vice President of Moody’s Terry Marshall. The main problem is that oil producers continue to produce.
“OPEC continues to produce oil without restriction as they fight for market share, exacerbating the situation in a crowded market. Russia has also substantially increased production, and the lifting of sanctions against Iran in 2016, the market may be swamped even more significant supplies,” he said.
Moody’s warns that oil supplies from Iran can match or even surpass the expected decline in production in the United States. The slowdown in production growth in non OPEC (including the USA), is regarded as one of the major factors that should affect the balance of supply and demand in the global market.
The Agency also issued a weak long-term forecasts for the quotations of oil contracts. According to analysts, by 2020, Brent prices could rise to $63 per barrel and WTI to $60 per barrel. Previously these projections were respectively $75 and $70 per barrel.
In the report, Moody’s also notes that the oil industry will require further reductions in capex, despite a decline of 20% in 2015.
The head of the CBR Elvira Nabiullina said on Friday that the dynamics of oil prices makes it more urgent risk scenario with oil prices at $40 for the next three years, but the regulator is not going to adjust their estimates.
“In our baseline scenario we expect oil prices in the coming three years will be close to $50. We continue to consider an optimistic scenario with more rapid recovery in oil prices. Such restoration consistent with the forecasts of many international organizations, analysts and participants of the oil market”, – said Nabiullina.
Finance Minister Anton Siluanov earlier suggested that in 2016 the price of oil in certain periods can drop to $30. “We didn’t manage to adopt the budget, we see that the situation with the macroeconomic changes. Changes not for the better. Oil prices we have budgeted $50 per barrel, now for about $36-37 per barrel. It is unclear what will happen next,” he said.
Siluanov separately said Iran’s influence on the market. “All the evidence suggests that low oil prices are likely next year to dominate and it is possible that during certain periods it will be, maybe, $30 a barrel, maybe less, we don’t know, – said the Minister. – Because a year ago if we were told that it would be below 40, everyone would probably just laugh. So you need to prepare for such difficult times for us”.
According to the Finance Ministry, at current prices for oil the Russian budget next year will lose about 2% of GDP, which in absolute terms is about 1.5-1.6 trillion rubles.
Quotes January futures on the mark Brent on London’s ICE Futures exchange to 15:54 Moscow time has grown on 1,53% – to $38.5 per barrel. The contract prices for mark WTI for January in electronic trading on the new York Mercantile exchange (NYMEX) by this time has increased by 0.85% to us $36,62 per barrel.