OPEC’s Sept 27 meeting won’t impact oil prices – Goldman Sachs

*The Goldman Sachs.

*The Goldman Sachs.

21 September 2016, Sweetcrude, Lagos – Goldman Sachs is unconvinced about the recovery of crude oil prices, predicting last week that crude will continue to trade within the US$45-50 band over the next 12 months.

It also says the Organisation of the Petroleum Exporting Countries, OPEC’s, meeting in Algeria, scheduled forSeptember 27, when the group will discuss a potential freeze with Russia, will not have any notable impact on oil prices, whatever the outcome.
Shale, according to Jeff Currie, head of commodity research at Goldman Sachs, has taken the upper hand, because production in the shale patch can be ramped-up or reduced much quicker than conventional oil.
This development has taken much of the leverage that previously was at the disposal of conventional oil producers, Currie said, according to Bloomberg.
He also said the primary reason crude oil will continue to trade within the US$45-50 band in the next one year is the simple lack of any upside potential for oil at present
He also suggested that the market may have already balanced itself at the current price levels, comparing the overall environment to that in the early 1990s when a barrel of crude sold for US$20.
Currie’s remarks come on the heels of the latest Oil Market Report of the International Energy Agency, which warned that the growth in demand for crude will be slower than previously forecast this year.
The IEA added that the supply will continue to be excessive through the end of the first half of 2017 at least.
Of course, a lot of this supply will continue to come from the current top producers globally, but there may be additional barrels coming from Libya as well, which will certainly aggravate the glut and possibly drag prices down below US$45.
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