By: Nadeemy Haded
Morgan Stanley said that the OPEC plan and its allies to cut crude production to the end of the first quarter of next year will support the market in the short term only, and that it is likely that Brent crude will return to $ 60 a barrel by mid 2020.
The bank cut its forecast for OPEC production next year by 400,000 bpd to 29.2 million bpd after oil producers led by Saudi Arabia and Russia agreed to cut production in the first quarter of 2020, but they refrained from adopting any commitment beyond March.
Despite the cuts, the bank expects non-OPEC supplies to grow to about 1.8 million bpd next year, with a monthly growth rate of US production of 50,000 bpd, which will be slower than in 2018 and 2019, according to Reuters.
Morgan Stanley expected a modest surplus next year, despite speculation that the demand would accelerate, with support from the implementation of IMO rules in 2020, which require shipping companies to reduce sulfur in ship fuel starting in January.
By 05:58 GMT, Brent fell 0.3 percent to 64.18 dollars a barrel, while West Texas Intermediate crude lost 0.5 percent to 58.91 dollars a barrel.
And Morgan Stanley expected that Brent to record $ 60.00 per barrel in the first quarter of 2020, but it reduced expectations to $ 60 for the rest of the year.
He expected West Texas Intermediate to settle at $ 57.5 a barrel in the first quarter, and then increase to $ 55 in the rest of next year.
Source Sky News