Mumbai: Moody's Investors Service has scaled down its estimate for prices of West Texas Intermediate and Brent crude oil for 2020 as global oil demand has been nearly wiped out, with the world economy set to enter a recession this year.
The US credit rating agency, in a statement, said it sees the prices of West Texas Intermediate averaging $30 per barrel this year, and those of Brent crude at $35 a bbl.
For 2021, Moody's sees the prices of WTI averaging $40 a bbl, and those of Brent at $45 per bbl. The agency's statement did not detail its previous estimates for the prices of WTI and Brent crude in 2020.
"The deeper global economic recession that we now expect in 2020 in all major advanced economies, including the US, will inflict significant economic damage and further reduce demand for oil products before economic activity recovers in 2021," the agency said.
In the short term, prices will remain weak unless supply cuts offset demand for crude oil, according to the agency. It also said the global production of crude oil will decline this year due to the latest deal between the Organization of the Petroleum Exporting Countries and its allies.
The OPEC and its allies had agreed to cut production by 9.7 mln bbl per day for May and June in an emergency meeting earlier this month. At 1718 IST, the June West Texas Intermediate contract was at $14.37 a bbl, and the July Brent contract was at $23.64 per bbl.