However, refining margins over the period will not drop to the extent shown during the 2008 global financial crisis, it said in a statement.
"Moody's changed the refining and marketing outlook to stable from positive in August, indicating that the sector has reached a peak in its business cycle, with only limited prospects for improvement from current levels, while risks to the downside have risen," said Simon Wong, a vice president and senior analyst at Moody’s.
"An expected increase in refining capacity worldwide - combined with a global slowdown in economic growth, and resulting in lower demand for refining products - will exasperate oversupply as soon as 2012, unless sufficient demand or the rationalisation of capacity materialises," he said.
Refining margins have “limited upside potential” as the structural overhang in refining capacity worldwide will persist, Wong said.
However, strong demand from China and India, which is expected to exceed the global growth trend, will benefit regional refineries serving intra-Asia markets, he added.
Separately, Moody’s said it has cut its 2012 forecast for WTI crude prices to an average of $80/bbl, down from $85 previously, on the back of an expected increase in global supply.
“The spike in oil prices earlier this year has moderated, with likely increased supply from Libya, Iraq and Brazil, and expectations of a slowing global economy,” Wong said.
“However, demand for oil should remain strong from continued economic growth in emerging markets, while a shift to a greater reliance on natural gas in Japan, China and elsewhere will keep the region's prices for liquefied natural gas [LNG] robust," he added.
