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US to See Record Number of Corporate Defaults Amid Oil, Gas Liquidity Woes

© Sputnik / Ilya Pitalev / Go to the photo bankoil derricks
oil derricks - Sputnik International
US corporate defaults will continue to increase amid the drop in oil prices and will hit the highest number in four years in October 2016, the US credit rating agency Moody’s said in a press release on Monday.

If global oil prices continue to stay around $50 a barrel, oil exporting Gulf States are going to have the grave economic future, IMF economist Bruno Versailles told Radio Sputnik. - Sputnik International
Gulf States to Run 'Out of Cash' in Five Years if Oil Prices Remain Same
WASHINGTON (Sputnik) — The United States has seen 38 defaults in the first nine months of 2015, 14 of which in the oil and gas industry, according to Moody’s. In 2014, only two US companies defaulted.

"The rating agency expects the default rate will climb to a four-year high of 3.8 percentage in October 2016 after rising for the first time in three years in 2015," the press release stated.

"Oilfield services liquidity is weakening and default risk is growing as new drilling activity slows and production at existing rigs declines," the press release said.

Oil Well Pump Jack - Sputnik International
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Moody’s noted that the US speculative-grade default rate went up from 2.1 to 2.5 percent in the third quarter of 2015.

Global oil prices have halved compared to the summer of 2014 levels, when the price of Brent crude stood at about $115 per barrel. At present, oil prices are hovering around $50 per barrel.

On October 23, Moody’s lowered its 2016 oil price assumption to $53 per barrel from the originally expected $57.

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