Investment bank Morgan Stanley released a report suggesting that Brent oil prices could fall as low as $20-25/barrel, with the bank pointing to the stronger dollar as the main factor behind its forecast for persistently depressed oil prices. Morgan Stanley analysts argued that oil is highly leveraged against the dollar and that a 5% appreciation in the currency could cause oil prices to fall by 10-25%.
According to media reports, Barclays also implemented a steep reduction in its crude oil price forecast for 2016, revising previous predictions of $60/barrel for Brent and $56/barrel for NYMEX crude down to $37/barrel for both benchmarks. The bank, which had previously expected oil prices to recover to $70/barrel in 2016, commented that oil market fundamentals continue to weaken while global economic conditions are also putting downward pressure on oil prices.