Oil: A new order sell-off – Goldman Sachs
|According to the analysts at Goldman Sachs, the oil market rebalancing appears to be unraveling, with prices back to pre-OPEC deal levels, record high US crude inventories, a sharp rebound in US drilling and a growing number of OPEC producers supporting an extension of their cuts for another six months.
Key Quotes
“Despite this lackluster start to the year, we continue to expect that OECD inventories will continue their decline, as high compliance with the cuts and strong oil demand absorb higher US production. This decline in inventories will push spot prices higher, in our view, with our 2Q17 Brent price forecast at $59/bbl.”
“Further, we reiterate our view that it is not OPEC’s goal to generate too high a recovery in prices and as a result, we believe that an extension of the cuts through 2H17 is currently not necessary. It is important to emphasize that our bullish price forecast is a view on the shape of the oil forward curve, with the faster decline in long-term oil prices than we expected this year a clear downside risk to our spot price forecast, even if our oil supply-demand projections prove correct and the rotation of the forward curve occurs.”
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