'Global oil, gas prices to remain weak'

'Global oil, gas prices to remain weak'

'Global oil, gas prices to remain weak'

 Global oil and gas prices will remain weak in 2016 on continued oversupply that will result in at least 20-25 per cent reduction in capital spending in upstream oil and gas exploration and production, Moody’s Investors Service said on Tuesday.

In its report ‘Oil and Natural Gas Industry – Global: Persistent Weak Prices in 2016 Rein in Capital Spending, Heighten Financing Risk’, it said oversupply will continue to hold down oil and gas prices in 2016.

“OPEC and many non-OPEC oil producers continue to produce without restraint as they battle for market share. Increased production has vastly exceeded growth in oil consumption, including from major consumers like China, India and the US,” it said.

The potential lifting of sanctions on Iran could add significant supply to the market in 2016, offsetting or even exceeding expected declines in US production.

“The oil and gas sector will see a rise in distressed exchanges and defaults amid the continued low commodity prices that we expect in 2016,” Moody’s said.

Moody’s forecast widely traded Brent crude oil to average $43 per barrel in 2016 before rising to $48 in next year and $53 in 2018.