Morgan Stanley now sees crude oil prices falling throughout 2016

Oil prices would continue falling throughout 2016 instead of rising, according to new research from Morgan Stanley, possibly confounding the likes of the European Commission who on the same day predicted a recovery beginning in the back half of the same year.

The broker cut its estimates for the price of Brent crude oil to $31 a barrel for the first three months of 2016, followed by $30 a barrel in the second and third quarters. It had previously forecast prices to be at $42, $45 and $48, for the last three quarter of the year.

"Weaker-than-expected demand, higher-than-expected supply, rising inventories and increased hedging incentives all work to delay rebalancing, and slow the rise in prices immediately thereafter,” the research team led by Adam Longson said in a rsearch report sent to clients.

“Demand growth has slowed, with even gasoline and the global consumer showing signs of deceleration,” Longson said.

“Global supply remains resilient and grows in 2016 on a combination of producer incentives, follow-through on longer lead time projects and the return of additional volume from Iran.”

As of 11:59GMT front month Brent crude futures were 0.86% lower to $34.74 per barrel on the ICE.