...Oil Price Collapse The oversupply in the crude market -- with U.S. crude inventories now at their highest levels in 80 years -- has led oil prices to fall more than 50% since June to approximately $50/bbl. The drop in pricing has been driven by strong global supply (particularly U.S. shale), weakening global demand and lack of OPEC price support. Fitch Ratings expects this oversupply to gradually correct as industry capex cuts, averaging approximately 35%, begin to scale back supply, although it will take time for the cuts to work their way through the energy chain. Glut Pressures Crude Spreads The sharp rise in U.S. crude oil stocks and weaker global product demand have compressed discounts for key crude spreads, removing some of the windfall profits the industry has seen since 2011. However, spreads are still above historical levels and continue to provide a modest tailwind. Brent-West Texas Intermediate (WTI) spreads have fallen to the $5¡$6/barrel level, but should widen out modestly...
