• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 2 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 3 days The United States produced more crude oil than any nation, at any time.
  • 9 days e-truck insanity
  • 4 days How Far Have We Really Gotten With Alternative Energy
  • 8 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 7 days James Corbett Interviews Irina Slav of OILPRICE.COM - "Burn, Hollywood, Burn!" - The Corbett Report
  • 7 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 9 days Biden's $2 trillion Plan for Insfrastructure and Jobs
  • 8 days "What’s In Store For Europe In 2023?" By the CIA (aka RFE/RL as a ruse to deceive readers)
  • 12 days Bankruptcy in the Industry

Moody's Lifts Medium-Term Oil Price Outlook

Moody’s Investors Service increased on Thursday its oil price forecast for the medium term to the $50-$70 a barrel range, returning to its outlook from before the pandemic, on the back of expected restraint in production growth and a rise in costs in step with growing demand through 2024.

“We are now returning to the medium-term price range we had before the coronavirus pandemic as we expect the cost of production to continue to rise in step with recovery in demand. We also expect that restricted supply will continue to support strong momentum in oil prices,” Moody’s Senior Vice President Elena Nadtotchi said in a statement.

Underinvestment in supply will be a key theme in the oil market in the medium term, as exploration and production (E&P) companies continue to keep disciplined spending on new supply and are expected to continue doing so in 2022 as well.

The upstream sector still shows capital spending restraint, which will limit production growth in 2022, when demand is set to continue recovering and even exceeding the pre-pandemic levels, according to Moody’s.

The restricted supply that will come from muted upstream investments is expected to support the strong pricing momentum in the medium term, the rating agency said.

“Our analysis demonstrates that upstream companies will need to increase their spending considerably for the medium term to fully replace reserves and avoid declines in future production,” Moody’s Vice President Sajjad Alam noted.

Analysts at Moody’s also said today that global annual upstream spending needs to increase by as much as 54 percent to $542 billion if the oil market is to avert a supply crunch in the medium term.

Underinvestment in upstream projects is a major wild card for oil markets going forward, analysts and industry officials say.

ADVERTISEMENT

The oil industry is “massively underinvesting” in supply to meet growing demand, which is set to return to pre-COVID levels as soon as the end of 2021 or early 2022, Greg Hill, president of U.S. oil producer Hess Corp, said last week.

By Tsvetana Paraskova for Oilprice.com

More Top Reads from Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News