Moody's raises oil price forecast

A Saudi Aramco facility. The company took the unusual step of signaling in advance how much oil it will pump and export

A Saudi Aramco facility. The company took the unusual step of signaling in advance how much oil it will pump and export

The move could have implications for U.S. sanctions on Iran, which could impact the latter's oil industry and exports, Facts Global Energy and Royal Bank of Canada warned.

Brent for May settlement added 30 cents to $64.94 a barrel on the London-based ICE Futures Europe exchange, and traded at a $3.78 premium to WTI for the same month.

Moody's Investors Service today raised its medium-term price band for crude oil to United States dollars 45-65 per barrel from USD 40-60 as continued OPEC-led production restraint and strong global demand growth have contributed to declining global inventories, offsetting rapid increases in U.S. shale production.

OPEC is warning that President Donald Trump's trade policies could hurt global economic growth and oil demand.

Despite this, general market conditions remain weak, and crude prices have not managed to return to their early 2018 highs of over $70 per barrel for Brent and nearly $67 a barrel for WTI. That's the first increase in stocks at the storage hub in 12 weeks, but overall inventory levels remain low at that location.

The Organization of Petroleum Exporting Countries acknowledged the scale of the shale boom, forecasting for the first time that supply growth from rivals will outstrip the increase in demand this year. "We continue to just chop around here", said Gene McGillian, manager of market research at Tradition Energy. The IEA will release its monthly oil report Thursday.


This week, the API reported a smaller build for crude oil, and another draw for gasoline.

OPEC revised up forecasts for non-OPEC supply for 2018 by 280,000 bpd in absolute terms, compared with last month's assessment, to average 59.53 million bpd.

On Monday, the EIA said production from major US shale formations should rise by 131,000 barrels per day in April vs. the previous month to an all-time high of 6.95 million bpd.

Tran told Bloomberg, "we do think over the course of the year oil prices will likely march to the beat of its own drum - so from that perspective we do believe the backdrop for the oil market is actually looking quite constructive".

In terms of the five-year average of OECD commercial stocks that OPEC is officially targeting in the production cut deal, preliminary data for January showed that total OECD commercial stocks were 50 million barrels above the latest five-year average, with crude stocks at a surplus of 74 million barrels and product stocks at a deficit of 24 million barrels to the seasonal norm.

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