Brent weak near $68 after Morgan Stanley cuts price forecast

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SHAFAQNA – Oil prices fell more than a dollar at one stage on Monday after Morgan Stanley cut its forecast for Brent crude, approaching a five-year low hit early this month, and the market got little support from mixed Chinese trade data.

“Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015,” Morgan Stanley said in a report dated Dec. 5.

Brent crude for January delivery dropped to a low of $67.73 a barrel, near last week’s trough of $67.53, which was its weakest since October 2009. It was down 85 cents at $68.22 at 0504 GMT (12:04 a.m. EST).

The price lost 6 cents initially after the release of Chinese monthly trade data that was well below expectations, with November exports rising only 4.7 percent from a year before and imports falling 6.7 percent.

Following the release an hour later of data showing that its crude oil imports rose 9 percent in November from October to 6.18 million barrels per day (bpd), the price edged up 8 cents, only to drift back down again.

In its report, Morgan Stanley slashed its 2015 base-case forecast for Brent to $70 from $98 and for 2016 to $88 from $102. In its worst-case scenario, the bank says the crude benchmark could fall as low as $43 in the second quarter of next year.

At a meeting last month, top oil exporter Saudi Arabia resisted calls from poorer members of the Organization of the Petroleum Exporting Countries to reduce production, fuelling a further slide in prices, which have lost more than 40 percent since June.

Saudi Arabia has since cut the prices of the crude it sells to the United States and Asia, which analysts said shows it is stepping up its battle for market share.

“With OPEC on the sidelines, oil prices face their greatest threat since 2009, but we expect a volatile 2015 rather than a one-way trade,” Morgan Stanley said in a report.

U.S. crude fell 72 cents to $65.12 a barrel, after hitting a session low of $64.63. West Texas Intermediate crude touched $63.72 last week, its lowest since July 2009.

Source : Reuters.com

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