Brent weak near $68 after Morgan Stanley cuts price forecast

BEIJING (Reuters) - Oil prices fell more than a dollar at one stage on Monday after Morgan Stanley cut its forecast for Brent (brent.167)crude, while the market got little support from mixed Chinese trade data.

"Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015," Morgan Stanley said in a report dated Dec. 5.

At a meeting last month, top oil exporter Saudi Arabia resisted calls from poorer members of the Organization of the Petroleum Exporting Countries (OPEC) to reduce production, fuelling a further slide in prices, which have lost more than 40 percent since June.

In its report, Morgan Stanley slashed its 2015 base-case forecast for Brent to $70 from $98 and for 2016 to $88 from $102. In its worst-case scenario, the bank says the crude benchmark could fall as low as $43 in the second quarter of next year.

Brent crude for January delivery dropped to an intraday low of $67.73 a barrel, near last week's trough of $67.53, which was its weakest since October 2009. It was down 77 cents at $68.32 at 0733 GMT (02:33 a.m. EST).

The price slipped slightly on Chinese monthly trade data that was well below expectations, with November exports rising only 4.7 percent from a year before and imports falling 6.7 percent.

Brent crude however edged back up following the release an hour later of data showing that China's crude oil imports rose 9 percent in November from October to 6.18 million barrels per day (bpd).

"We expect China's trade data to cause falling oil prices to fall further, as exports were lower than expected," Daniel Ang of Phillips Futures said. "Although lower imports would imply less crude imports, we attribute falling crude oil prices to be the primary reason for a reduced value of China's imports."

U.S. crude fell 64 cents to $65.20 a barrel, after hitting a session low of $64.63. West Texas Intermediate crude touched $63.72 last week, its lowest since July 2009.

"Oil markets continue to find a new balance following OPEC's signal to share the burden of supply adjustment," Barclays analysts said in a note. "Part of the balancing next year hinges upon demand growth."

Since the OPEC meeting on Nov. 27, Saudi Arabia has cut the prices of the crude it sells to the United States and Asia, which analysts said shows it is stepping up its battle for market share.

"With OPEC on the sidelines, oil prices face their greatest threat since 2009, but we expect a volatile 2015 rather than a one-way trade," Morgan Stanley said in a report.

A Moody's report published on Monday said the Gulf states will be able to maintain spending despite lower revenues, although Oman and Bahrain may come under pressure.

Looking ahead to February deliveries, Daniel Ang said in a note that support levels for Brent are at $67.93 and $70, and at $63.84 and $66.09 for West Texas Intermediate.

(Additional Reporting by Manolo Serapio Jr in SINGAPORE; Editing by Edmund Klamann, Alan Raybould and Biju Dwarakanath)

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