BRASILIA: Brazil oil price plunged to $52 per barrel as Moody’s warns that oil companies will have to make deep cutbacks to spending. Brent crude has slumped to a new five-and-a-half-year low as leading ratings agency Moody’s warns that oil companies could be forced to slash spending by up to 40pc this year.
The benchmark crude contract fell to as low as $51.64 per barrel in early trading, while West Texas Intermediate oil traded in the US fell 2.2pc to $48 per barrel.Earlier, Moody’s Investors Service issued a report warning of broad cuts in spending that could soon hit the entire oil and gas industry as companies move to protect their dwindling profit margins.
The agency fears that, should prices remain below $60 per barrel for a significant period, companies in North America will slash capital spending by up to 40pc.
“If oil prices remain at around $55 a barrel through 2015, most of the lost revenue will hit the E&P [exploration and production] companies’ bottom line, which will reduce cash flow available for re-investment,” said Steven Wood, managing director for corporate finance at Moody’s.
