Oil price recovery fragile, says Goldman Sachs
Goldman Sachs said that given the instability in each country, it continues to conservatively assume that only 100,000 barrels a day of these disruptions will come back online in the second half of the year, leaving risks skewed towards higher production.
"Importantly, each country has the potential to move the global oil market back into surplus given our modest 230 kb/d expected deficit in 2H16. As a result, we reiterate our view that the oil price and fundamental recovery remains fragile."
The bank stuck to its forecasts that oil would remain at $45-$50 a barrel through next summer.
"A sustainable pick-up in disrupted production would lead us to lower our oil price forecast with WTI prices needing to average $45/bbl next year to accommodate an additional 500 kb/d of supply for example."
Goldman said that while oil prices have rebounded sharply since the beginning of this month, the upward move was not driven by better oil fundamentals but rather by headlines around a potential output freeze and a weaker dollar.
"A deal to freeze production when OPEC and some non-OPEC producers meet in Algeria on September 26-28 is possible in our view, after six failed attempts, as it would show signs of cooperation from Saudi's new energy minister.
"But the possibility may not be high - Russia's energy minister commented on August 8 that he did not see the basis for such a free." ■