Crude oil prices are expected to remain below $60 per barrel in the long term, the global rating agency Fitch Ratings said Monday.
The agency indicated that falling oil production costs around the world, shale oil's growth potential in the U.S., and shale oil's ability to respond quickly to changing market conditions would keep crude prices lower.
'The land rig count in the U.S. lower 48 has risen around 45 percent since the end of 2016, contributing to a rebound in U.S. crude production to over 9.5 million barrels a day (mbpd) from a trough of about 8.4 mbpd in July 2016,' Fitch said in a statement.
'We continue to expect U.S. production growth to remain robust in the second half of 2017 based on the roughly two- to four-month lag between spudding shale wells and production,' it added.
Fitch, however, said it is 'skeptical' about the effectiveness of OPEC's production cuts that aims to rebalance supply and demand in the global oil market in the near term.
The rating agency said it expects OPEC's compliance rates in the second half of this year to be weaker than in the first half of the year overall.
'Global inventories of both crude oil and refined products remain well above historical averages,' the statement also added.
Fitch forecasts global benchmark Brent crude to average $52.50 per barrel in the fourth quarter of this year and for next year, and $55 a barrel in 2019.
American benchmark West Texas Intermediate is anticipated to average $50 a barrel in the fourth quarter of this year and in 2018, and $52.50 per barrel in 2019.
By Ovunc Kutlu in New York
Anadolu Agency
energy@aa.com.tr