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CALGARY – Thanks to the continued glut of oil supply, forecasters at Moody’s Investors Service do not expect crude prices to return to the US$70 per barrel level until the end of the decade.

The oil rout, which has caused thousands of layoffs in Alberta as West Texas Intermediate benchmark crude has fallen from US$100 per barrel last summer to US$47.26 per barrel on Friday, is expected to continue through 2016 and 2017, Moody’s said in a report released Monday.

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Moody’s analysts have lowered their estimates for oil prices and now say WTI will average US$48 per barrel throughout 2016, rising to US$55 per barrel in 2017.

Eventually, oil supply will fall and the market will balance at average WTI prices of US$70 per barrel but that will happen “only at the end of the decade.”

“This price would support development of the world’s most expensive oil — from oil sands and deepwater resources — in an environment where development costs are lower than in recent years,” the Moody’s report said.

Financial Post

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