UBS slashes crude oil forecast to $40 a barrel

2016-01-15

UBS slashed its oil-price forecast for 2016 on Thursday, joining the growing group of investment banks that have turned more negative on the commodity after the recent selloff.

In a report dated Jan. 13, but released on Thursday, UBS said it expects crude oil CLG6, +1.18% to average $40 a barrel in 2016, down from its previous forecast of $52.50. For Brent, the bank lowered its outlook to $42.50, down from $57.50.

“In the near-term the market remains oversupplied and we expect global inventories to continue building until 3Q16, dampening any potential price recovery,” the analysts said in a note. Crude oil traded around $30.70 on Thursday, while Brent traded at $30.66.

The forecast change at UBS comes after Barclays on Tuesday cut its 2016 estimate to $37 a barrel, while Bank of America Merrill Lynch downgraded its outlook to $45 a barrel on Monday. Also this week, Morgan Stanley rekindled the idea that crude oil could fall to $20 a barrel.

Source from : MarketWatch

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