Moody's has announced big cuts to its oil price forecasts

Lowered its price estimate in 2016 for both Brent crude and West Texas Intermediate (WTI) crude to $33/barrel (bbl)

  • For Brent, this marks a $10/bbl reduction from its previous estimate
  • For WTI, a $7/bbl reduction
  • Expects that both prices will rise by $5/bbl on average in 2017 and 2018

Cites:

"OPEC countries continue high levels of production in the battle for market share, contributing to the current oil glut despite moderate consumption growth by key consumers such as China, India and the US"

"In addition, we expect the rise in Iranian oil output this year to offset or exceed production cuts in the US"

"Today's large global inventories will still take time to unwind and will continue to drag on prices even as demand picks up"

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There is nothing surprising in Moody's reasoning. The cited factors have been discussed for months now.