Goldman cuts 2019 crude price view; sees recovery from current levels
09 January, 2019, 08:41
Saudi-led OPEC and Russian Federation agreed on December 7 to curb their total crude oil production by 1.2 mbpd beginning on January 1 for six months, but the plan so far has had little impact on crude prices.
Oil futures have gained about 10 percent since last Monday.
American benchmark West Texas Intermediate was at $48.55 a barrel at the same time and saw a 0.4 percent loss having closed Monday at $48.76 per barrel.
International Brent crude futures gained 55 cents to $57.88 per barrel by 0945 GMT.
"Momentum is coming back into the market from very depressed price levels", Petromatrix strategist Olivier Jakob said. Investor confidence is growing as the Organization of Petroleum Exporting Countries and it allies start their pledged production cuts this month, led by Saudi Arabia.
Apicorp noted that the cuts to production undertaken by Opec and allies may not be sufficient to balance the market, which may see build up of inventory levels, particularly as United States shale is expected to top 12 million bpd during the second half of the year.
Moody's also raised similar concerns about the effectiveness of Opec's output cuts and ability to maintain compliance this year, as the reduction comes after already record-high production by Saudi Arabia and Russian Federation.
Rising production from North American shale basins, particularly the USA, which surged past 11 million bpd in August, outpaced sovereign producers Saudi Arabia and Russian Federation and was one of the factors behind the market's oversupply, the report said.
Because of record US crude oil production C-OUT-T-EIA of 11.7 million bpd, American fuel stockpiles are rising, according to weekly data by the Energy Information Administration (EIA). In fact, the continuous low price of oil is depicting a weaker economy of the world and the surging U.S. production.
Supporting Ritterbusch's observations was news from Genscape that USA crude inventories at Cushing, Oklahoma fell by 565,000 barrels from last Tuesday to Friday.
PRICE Futures Group senior analyst Phil Flynn on the outlook for oil prices and the impact on the USA soybean market from the tariff tensions with China.
"The oil market is still pricing in a sharp slowdown in global growth despite our economists' forecast for resilient growth and robust late-2018 oil demand data", the investment bank said. Shares have risen on expectations that trade talks this week between the United States and China will ease the trade war. As oil is one of the most important aspects of the economic growth and graph, the global stocks are witnessing a roller coaster ride.
Goldman said the cuts would result in a gradual increase in spot crude prices in 2019 as high inventories revert to their 5-year averages.
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