Brent Crude oil prices are likely to stay close to current levels next year, range-bound at around $45 a barrel due to uneven demand recovery, Moody’s said in a report, quoted by ETEnergyWorld.
Next year, oil prices will be in the $40 to $45 per barrel range—that is, at the lower end of the medium-term price forecast by Moody’s of $45 to $65.
According to Moody’s report on its 2021 expectations, the outlook for next year is stable with modest gain for prices but still limited capital investment.
“Modest improvement in 2021 oil prices will not lead producers to boost capital investment, while fuel demand will rise but not to pre-downturn levels,” the rating agency said.
Last week, another rating agency, Fitch Ratings, said it expected Brent Crude to average $45 a barrel next year, following OPEC+’s decision to raise production by 500,000 bpd in January 2021.
“This assumes that the demand will remain weak until at least the second half of the year, because the progress with mass vaccination probably will not be very quick,” Fitch senior director Dmitry Marinchenko told CNBC on Friday.
Vaccine news sent oil prices higher at the end of last month, and the fact that OPEC+ had achieved an agreement on the next step in the production cut deal after long debates helped them stay higher.
Earlier last week, Fitch Ratings said that it “believes that the global oil and gas (O&G) market will be on the way to recovery in 2021, though the improvements will be moderate and lack certainty.”
Oil and gas companies are not expected to significantly boost their capital expenditure (capex) plans next year, and the focus on cutting costs is likely to continue, Fitch said.
The oilfield services industry will continue to be under more pressure than companies operating in the upstream, midstream, or downstream, according to the rating agency.
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By Tsvetana Paraskova for Oilprice.com
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