Goldman Sachs sees ‘upside’ to oil price forecasts from OPEC+ supply deal
U.S. investment bank Goldman Sachs said the OPEC+ deal to boost oil supply supports its view on oil prices and expects modest “upside” to its summer forecast for Brent to reach $80 a barrel.
OPEC+, comprising the Organization of the Petroleum Exporting Countries, Russia and other producers, agreed on Sunday to boost oil supply from August to cool prices which have climbed to 2-1/2 year highs.
“The agreement had two distinct points of focus: a moderate increase in production which will keep the market in deficit in the coming months, as well as guidance for higher capacity which will be needed in coming years given growing under-investment,” Goldman Sachs said in a note.
OPEC+ deal should end $100 a barrel crude oil predictions
The OPEC+ deal to boost crude oil output from August was always the most likely outcome to the producer group’s earlier impasse, and it should be enough to end market talk of $100 a barrel oil, at least for now.
OPEC+ ministers agreed on Sunday to boost production by 400,000 barrels per day (bpd) from August to December, adding a total of 2 million bpd to global supply by the end of the year.
Additionally the group, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, agreed to new production allocations from May 2022, resolving the dispute sparked by the United Arab Emirates (UAE), which had wanted the baseline for its output quota raised.
Oil prices fell Monday, the day after OPEC+ raised production limits.
The price of Brent crude oil considered the global benchmark for oil prices fell as low as at $65.78 a barrel Monday. On Friday, the price was $70.89. The drop constituted a roughly 7% decrease.
The decrease followed a production agreement by the Organization of the Petroleum Exporting Countries (OPEC) and Russia. On Sunday, the states agreed that the production limits on Iraq, Kuwait, Saudi Arabia, the United Arab Emirates and Russia would rise. The cartel additionally decided to boost its monthly production as a whole by 400,000 barrels a day every month from August through December, The Associated Press reported.
Oil Declines In Wake Of OPEC+ Deal To Boost Supply, Rising Covid Cases The Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, reached a compromise on Sunday to increase oil supply from August.
Updated: July 20, 2021 12:16 pm IST
Oil slumped $5 a barrel on Monday, closing out its worst day since March, after an OPEC+ agreement to boost output stoked fears of a surplus just as rising COVID-19 infections once again threaten demand.
Crude oil s year-long recovery has stalled out over the last two weeks due to the prospect of new supply undermining the case for higher prices. With the Delta variant of the coronavirus spreading worldwide - fuelling a 70% rise in US infections last week - funds bailed out of long positions on Monday across multiple risk asset groups, including stocks and the dollar.
OPEC Oil Producers Reach Agreement To Boost Oil Supply As Prices Spike To Nearly 3-Year High
In hopes of quelling rising oil demand, the group of international oil producers known as the Organization of the Petroleum Exporting Countries agreed on Sunday to boost oil production beginning next month, ending a weeks-long standoff that helped push oil prices to a nearly three-year high.
Following two weeks of fraught discussions, the oil cartel and its allies agreed to increase oil production by 400,000 barrels per day starting in August on a monthly basis until they are once again operating at pre-pandemic capacity.
After cutting production by about 10 million barrels per day last year, the oil producers are still supplying about 5.8 million fewer barrels per day than before the pandemic, meaning the Sunday agreement would put production back at pre-pandemic levels by September 2022; the group will reassess the decision in December.