Morgan Stanley has lowered its long-term Brent price forecast, citing the decision by the OPEC and its allies to extend production cuts by longer than expected as a source of oil price weakness.
“OPEC cuts can be very effective when they smooth over relatively temporary imbalances in supply and demand. However, when they become multi-year transfers of market share, history shows that they are usually associated with oil price weakness rather than oil price strength,” the investment bank said, according to Reuters.
The bank has revised lowered its long-term Brent price forecast to $60 per barrel from $65 per barrel and expects prices to fluctuate around $65 per barrel, from $67.5 per barrel previously, in the next three quarters.
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