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KUALA LUMPUR: Moody’s Investors Service has revised upwards its medium-term oil price range outlook to US$50-70 per barrel to reflect its expectation of a continued increase in the cost of production in step with recovery in demand.

“We are now returning to the medium-term price range we had before the coronavirus pandemic,” senior vice-president Elena Nadtotchi said in a statement today.

She said the credit rating agency also expected restricted supply to continue supporting strong momentum in oil prices.

Nadtotchi said the upstream energy sector continued to invest well below pre-pandemic levels despite the sharp turnaround in oil and natural gas prices in 2021.

“Exploration and production (E&P) companies are signalling continued spending restraint in 2022,” she said.

She said upstream spending has risen only slightly after a steep 30% drop in 2020.

“Producers are still planning to invest conservatively in 2022 but we expect modest spending growth on the back of high commodity prices,” she said.

Meanwhile, vice-president Sajjad Alam said the analysis demonstrated that upstream companies would need to increase their spending considerably for the medium term to fully replace reserves and avoid declines in future production.

“Large independent E&P, integrated and national oil companies will all keep production disciplined through 2022, boosting supply gradually to match returning demand with the pace and scope of production increases varying by company and region,” he added. – Bernama

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