UPDATE: EU, Morgan Stanley cut 2016 Brent average price forecast

(Adds details in headline, lede, last two paragraphs)

BRUSSELS, Feb 4 (PRIME) -- The European Commission reduced its forecast for the average Brent oil price in 2016, and U.S. bank Morgan Stanley for the price in each quarter of 2016 on Thursday, according to documents seen by PRIME.

The European Commission reduced the annual projection by 34% to U.S. $35.8 per barrel. The Brent price forecast for 2017 was cut to $42.5 from $58.8.

The authority said that there is much uncertainty of whether the forecast will come true in the short and medium term because of the geopolitical tensions and Iran’s return to the global market.

Morgan Stanley cut the price target for January–March to $31 from $42, for April–June and July–September to $30 from $45 and $48 respectively, and for October–December to $29 from $59.

“The challenge is that demand growth is slowing. When combined with seasonality and lagged data, confirmation of large draws and rebalancing now may not be apparent until mid-2017 in our base case. Thus, we see this low price regime persisting until April–June 2017, with a more muted initial recovery post-rebalancing,” analyst Adam Longson said, as quoted in a report of the bank.

End