Moody’s ups 2016 oil price forecast to $40

New Delhi, June 17: Moody’s Investors Service on Friday revised upwards its price forecast for oil this year on the back of recent uptick in rates.

“Moody’s assumes a medium-term oil price band of $40 to $60 per barrel for both WTI and Brent crude and upwardly revised its shorterter m oil price estimates for these crudes to $40 in 2016, $45 in 2017 and $50 per barrel in 2018,” the rating agency said.

In March, Moody's estimated oil prices to be around $33 per barrel in 2016, which will rise to $38 next year and to $43 in 2018.

In a release titled ‘Moody's: Challenging conditions for oil-related entities remain unchanged despite nearterm price rebound’, the rating agency said its medium-term outlook for the sector remains unchanged.

“In the energy sector, the recent uptick in price levels provide only moderate relief from the underlying stress,” said Moody's senior vicepresident Terry Marshall. “We have seen a significant deterioration in the credit profiles of many energy companies that were largely capitalised in an environment of much higher oil prices — around $100 a barrel — and are now grappling with cash flows that remain mismatched to their debt load.”

Similarly, Moody's noted that adjusting to structurally lower oil prices will remain a medium-term fiscal and economic policy challenge for most oil-exporting sovereigns. PTI