TheCable

Moody’s, US-based ratings agency, says crude oil prices will remain within the range of $40 to $60 despite the extension of the supply cuts agreed on by the Organisation of Petroleum Exporting Countries (OPEC).

The agency made this prediction in its 2018 credit trends report for the global oil and gas industry.

“Oil prices will remain at $40-$60 per barrel in 2018 despite the extension of OPEC-led production cuts through the end of the year, Moody’s Investors Service says in its 2018 credit trends report for the global oil and gas industry.

“Higher prices within or above that range will see supply grow as countries lessen their compliance with production quotas and US shale production continues to increase. Meanwhile, abundant supplies of US natural gas will constrain prices, even while demand goes up.”

In December 2016, OPEC and non-OPEC countries had agreed to reduce crude supply to the market to end a supply glut that saw oil prices reduce to as low as $29 per barrel.

“Political unrest in the Middle East, alongside assumptions of OPEC extending its agreement to cut production, helped to bolster oil prices in late 2017,” Terry Marshall, a Moody’s senior vice president, said.

“Yet even with these factors offering a boost, prices will likely remain range-bound, and possibly volatile, on a combination of increasing US shale production, reduced but still significant global supplies, and potential non-compliance with agreed production cuts — especially if demand growth is more tepid.”

For the first time since 2014, oil prices opened the year above $60. As at 4:30pm on Wednesday, Brent crude, the international benchmark of crude oil was trading at $67.37 while West Texas Intermediate (WTI) traded at $61.22.