Moody's downgrade 2016 oil prices estimates

Moody's downgrade 2016 oil prices estimates

Ratings agency Moody's has cut its price outlook for the both Brent crude and WTI, believing the rise in prices will take place at a much slower pace than originally forecast as oversupply and demand issues show no signs of waning.

The agency downgrade it price assumption in 2016 for Brent crude to $53 per barrel, down from $57. WTI was cut to $48 from $52 per barrel

Moody's expects both prices to rise by $7 per barrel in 2017, which is down $5 per barrel from its prior forecast.

"We believe that oil prices will remain lower for a longer period, as large built-up inventories and oversupply cause oil prices to increase at a slower rate," said managing director of corporate finance at the group, Steve Wood.

"Although supply should begin to drop as capital spending declines, increased Iranian exports could place additional pressure on oil prices in 2016," he added.

Oil prices suffered on Monday following economic data from China, the world's largest energy importer, which showed its economy grew at the slowest pace in six years in the third quarter, according to official data released on Monday.

Brent for December delivery tumbled over $1 or 2.3 percent, at $49.31 a barrel in afternoon trade in London.U.S. crude for November delivery slipped 74 cents, or 1.6 percent, at $46.44 a barrel, recovering slightly from earlier losses.

The price of oil has collapsed from near $120 a barrel in June last year to lows of around $40 in August.