Goldman Raises 2018 Crude Price Forecast
A stronger than anticipated OPEC-led commitment to extend production cuts will support prices through 2018, according to analysts at Goldman Sachs.
In a research note published late Monday, Goldman lifted its Brent price forecast for next year to $62 a barrel and its WTI projection to $57.5 a barrel. The revisions were up from $58 a barrel and $55 a barrel respectively, CNBC reported.
While the OPEC-led deal “leaves room for an earlier exit than currently scheduled, we now reflect this resolve in our supply forecast, with full compliance for longer and a more modest exit rate,” Goldman analysts said in the research note.
Oil prices have lost ground in the days following OPEC's deal with global producers last week. The 14-member body, Russia and nine other crude producers announced plans to extend their output cuts until the end of 2018.
The move was heavily telegraphed ahead of the decision, but oil producers had earlier indicated they could exit the deal if they feel the market was overheating.
"Of course, risks remain and we see these as skewed to the upside into 2018 on the risk of an over tightening, either because of new disruptions, demand exceeding our optimistic forecast of OPEC letting the stock draw run hot," Goldman analysts said.
However, Goldman said the response of shale oil and other producers to higher prices would likely incentivize OPEC and Russia to "pare back" their now greater capacity, thus leaving risks to prices skewed toward the downside over the long run.
The price of oil collapsed from near $120 a barrel in June 2014 due to weak demand, a strong dollar and booming US shale production. OPEC's reluctance to cut output was also seen as a key reason behind the fall. But, the oil group soon moved to curb production—along with other oil-producing nations—in late 2016.
Brent crude traded at around $62.36 on Tuesday morning, down 0.14%, while US crude was trading at $57.29, down 0.31%.
Cap: Oil prices have lost ground in the days following OPEC's deal with global producers last week.
source: Financial Tribune
Top News
Glencore in talks to sell Philippine copper smelting unit
Rasul Khalife Soltani, Secretary of the Iranian Steel Producers Association on the sidelines of the 1403 Steel Symposium:
Mobarakeh steel is producing green steel through scrap recycling
India’s record gold import said to be due to calculation error
Volkswagen buys 9.9% of Patriot Battery Metals for $48 million
Sibanye raises $500m via metals streaming deal with Franco-Nevada
Norge Mining acquires Europe’s largest natural graphite producer
Mercuria partners with Zambia on metals trading venture
Aluminum price falls to one-month low in wider commodity slump
Skeena advances Eskay Creek permitting, unlocks Orion funding
Lure of Anglo’s copper mines could test BHP’s spending resolve
Copper giant Peru foresees another production plateau in 2025
Iron ore price weakens as Australia flags return to sub-$100 prices
Nickel price hits 4-year low as gloom offsets potential Indonesia cuts
Mercuria partners with Zambia on metals trading venture
Sibanye raises $500m via metals streaming deal with Franco-Nevada
Triple Flag to acquire royalty on Tres Quebradas lithium project
Volkswagen buys 9.9% of Patriot Battery Metals for $48 million
Aluminum price falls to one-month low in wider commodity slump
India’s record gold import said to be due to calculation error
Lure of Anglo’s copper mines could test BHP’s spending resolve
Iron ore price weakens as Australia flags return to sub-$100 prices
Nickel price hits 4-year low as gloom offsets potential Indonesia cuts
Sibanye raises $500m via metals streaming deal with Franco-Nevada
Triple Flag to acquire royalty on Tres Quebradas lithium project
Volkswagen buys 9.9% of Patriot Battery Metals for $48 million
Aluminum price falls to one-month low in wider commodity slump
India’s record gold import said to be due to calculation error
Glencore in talks to sell Philippine copper smelting unit
