OREANDA-NEWS. Fitch Ratings expects that the macro environment for EMEA oil majors will remain challenging in 2016. Crude prices are unlikely to recover, while refining margins will moderate from the record 2015 levels. However, cost deflation should become more pronounced and help to cushion the majors' profits.

While the sector outlook is viewed as generally negative, the rating Outlook is Stable as we do not expect sector-wide negative rating actions. Credit metrics of most players will remain stretched in 2016, but this cyclicality is a known feature of companies in this industry, and we will only take negative action where we expect the current downturn to permanently impair companies' credit profiles.

We expect that cost deflation in the industry should help to push the majors' opex and capex down in 2016. Though the potential extent of deflation is still unclear and will depend on how long oil prices remain depressed, current rates for many oil services have already decreased by up to 20%. Offshore drilling rates have fallen even more, by 30-40%. Furthermore, the depreciation of national currencies in oil-producing countries should also help the majors to reduce operating costs.

For more information on Fitch's expectations for the sector in the coming year, see "2016 Outlook: EMEA Oil Majors " on www.fitchratings.com.