Moody's Investors Service cuts oil price estimate to $33/bbl

Moody's Investors Service said on Friday reduced oil price estimates in light of the continued oversupply in the global oil markets, with Iran poised to add 500,000 barrels per day (bpd) while demand growth remains tepid.

Brent crude, the international benchmark, and West Texas Intermediate (WTI) crude, the North American benchmark, will both average $33 a barrel (bbl) for 2016. For Brent, this marks a $10/bbl reduction from its previous estimate, and for WTI a $7/bbl reduction. Both prices will rise by $5/bbl on average in 2017 and in 2018.

The Organization of the Petroleum Exporting Countries (Opec) and many non-Opec oil producers continue to produce without restraint as they battle for market share.

The addition of Iranian oil to the market in 2016 will offset or exceed a roughly 500,000-bpd decline in the US production, Moody's Investors Service stated in a report released on Friday.

Increased production vastly exceeds growth in oil consumption, even with consumption growth by major consumers such as the US, China and India. Production now exceeds demand by two million bpd, adding to the already high global oil stocks.