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The international rating agency Moody’s Investors Service, in its latest report, revised down their 2020 average price forecast for Brent oil to $35/ barrel.

Key quotes

“Notwithstanding the recent increase in prices, we now assume that Brent will average $35/barrel (bbl) this year and $45/bbl in 2021, or $8/bbl below our March 2020 assumptions.” 

“We also expect oil prices to remain below their path pre-coronavirus, as long-lasting changes to oil-intensive travel and transport in particular lower oil demand for several years to come.”

“Low oil prices are likely to exert the highest pressure on Iraq, Oman and Kuwait due to the limited space for the fiscal policy pursuit and higher liquidity pressure, the rating agency noted. At the same time, relatively greater levels of economic diversification buffer the impact on Russia.”

Market reaction

Both crude benchmarks are trending lower so far this Wednesday’s Asian trading, as they lick their wounds following a drop induced by an unexpected build in the API US crude stocks. WTI loses 1.60% to 38.30 while Brent drops 1.35% to 40.65.

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