ANKARA
Oil prices are expected to continue its decline in the first half of 2015, a report by Morgan Stanley forecasted on Friday.
"Prices are set up to fall in the first half of 2015," said the U.S. multinational investment banking firm in a report entitled "Crude Oil, 2015: It Likely Gets Worse before it Gets Better."
Brent crude oil price is expected to continue its decline in the next six months, and can fall as low as $43 per barrel in the second quarter of 2015, according to the report.
The global benchmark Brent crude oil price fell more than 40 percent since June, from $115 per barrel to the five-year low of $67.17 last Monday, Dec. 1.
"Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015," said the report.
OPEC, the Organization of the Petroleum Exporting Countries, met on Nov. 27 to devise a strategy against the falling prices, and decided not to cut production for the first half of 2015, thus not interfering with the excess supply in the oil markets.
"The market may find balance as early as the second half of 2015, through demand stimulation, slower U.S. production growth or an outage," said the report.
Global oil demand remains low due to slow growth rate in Asian and European economies, while the increase in U.S. domestic oil production hampers the country's oil imports from overseas.
Since the 2008 shale boom, the U.S. domestic oil production increased from 1.8 billion barrels in 2008 to 2.7 billion barrels in 2013, while its imports dropped 16 percent in 2013, according to the Energy Information Administration.
During the second half of 2015, Morgan Stanley's bearish outlook for Brent crude oil price is $48 per barrel, while it’s most bullish prediction is $95. In 2016, these prices are predicted to be $65 and $98 respectively.
While a bull market indicates a period of rising prices, a bear market displays a decline in the stock market.
"Sustained low prices also risk a supply crunch by 2017 or 2018 related to insufficient investment," the report said, forecasting a rise in oil prices for those years.
According to the report, the financial giant's bearish and bullish predictions for 2017 are $95 and $115 respectively, and $80 and $120 for 2018.
www.aa.com.tr/en
