US investment bank revises forecast after Opec states make plans to start cutting production
Oil price will get close to $60 in early 2017, says Goldman Sachs
One of the most bearish oil-price analysts has upped its 2017 forecasts for the second time in two weeks.
Earlier this year, Goldman Sachs sensationally predicted the oil price could slump to as low as $20 a barrel as entrenched oversupply wreaked havoc on the market.
It was almost proved right, too, as oil sunk to well below $30 a barrel in February.
But since the powerful Opec cartel – followed by a group of other global producers - confirmed a deal to cut output by almost 1.8 million barrels per day from January, the US investment bank has increased its already much-improved forecasts.
At first it said compliance with the deal would be around 55 per cent, equating to a million barrels per day, and predicted oil would rise to $55.
It has now revised those estimates in the wake of signs that some Opec states are already making moves to cut production next month, says Reuters.
In particular, "Kuwait, Saudi Arabia, and Abu Dhabi… have notified customers that they would cut supplies from January".
The investment bank says it expects Brent crude, the international oil price benchmark, to hit $59 a barrel in the second quarter and West Texas Intermediate (WTI) to make $57.50.
In the short term, however, prices will not move much from their current base in the low $50s, well below last week's peak of $58, as the market waits for signs of Opec members following through on their pledges.
"Iraq, the group's second biggest producer after Saudi Arabia, has signed new deals that will increase its sales to Asian customers like China and India despite its commitment to reduce output by 210,000 ," Reuters adds.
US investment bank Jefferies said the agreement "has likely put a floor on Brent oil prices in the low $50s until such time as adherence to the cuts can be assessed".
Brent and WTI were mostly unchanged this morning, at around $54 and $51 a barrel respectively.