For Oil Investors, This May Be as Good as It Gets for Bumpy 2018

(Bloomberg) -- The new year's $60-plus crude prices may be as good as it gets for oil traders if Moody's Investors Service has it right.

Brent and West Texas Intermediate oil prices will probably oscillate between $40 and $60 a barrel this year, penned in by rising U.S. shale production, declining but still hearty global supplies and eroding compliance with OPEC-led output cuts, the ratings agency said in a report Tuesday. Abundant supplies of natural gas will also constrain prices, Moody's said.

Boosted by OPEC's latest deal and outages from the North Sea to Libya, prices have already surged above those levels in recent weeks. Brent crude sold for $66.70 a barrel and WTI cost $60.39 a barrel at 10:10 a.m. in New York trading.

Moody's also predicted a surge in corporate buyouts among exploration and production companies, after the industry played it cautious in 2017 and focused on smaller deals to trade acreage or divest units.

“Larger E&P companies with strong balance sheets will seek efficiencies of scale in higher-return basins,” Amol Joshi, a Moody's vice-president, said in a statement. “For their part, smaller and sometimes over-leveraged firms could create value by combining with larger producers to accelerate development.”

To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net.

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net, Joe Carroll, Stephen Cunningham

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