Global Credit rating agency, Moody’s Investors Service in its outlook for 2019 has said oil and natural gas prices will be volatile, but also range-bound while maintaining that one of the top factor to watch in 2019 would be Organization of Petroleum Exporting Countries (OPEC’s) discipline in adhering to the production cut agreement sealed in December.
“Market expectations for continued strong oil demand growth remain in place, despite concerns about slowing demand growth as a result of weaker economic growth, the impact of tariffs and a strong U.S. dollar,” said the credit ratings agency’s managing director for oil and gas, Steve Wood.
Moody’s expects West Texas Intermediate to remain within a range of US$50-70 a barrel over the next five years, noting that although efficiency gains have served as tailwinds for U.S. oil production, pipeline bottlenecks have at least partially offset the positive effect by raising transportation costs.
Wood added that “Very high Saudi and Russian production, in particular, has heightened supply volatility, so whether OPEC and Russia maintain production discipline and renew agreements to limit output are key concerns going into the New Year.”
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