Oil prices on world markets rose sharply after the publication of Goldman Sachs report. According to the report, oil markets will run a deficit in the second half of 2016.
The experts note that a decline in production, driven by unexpected supply disruptions as well as sustained demand, has led to a “sudden halt” of the market surplus. According to them, the unexpected outages caused by everything from wildfires in Canada and pipeline attacks in Nigeria will keep the market in deficit through the second half of this year.
That’s prompted the bank to raise its US crude price forecast to $50 a barrel for the second half of 2016 from a $45 estimate in March, Bloomberg reports.
However, Goldman Sachs’ experts believe that the market will return to a surplus in 2017. The main reason for that is a possible future increase in production by Iran and Iraq, as well as an increase in a low-cost production by Saudi Arabia, Kuwait, the UAE and Russia.
Oil prices rose sharply after the publication of this report. As of 09:40, a barrel of Brent rose by 1.32% to $ 48.46. At the same time futures for WTI rose 1.3% to $ 46.81 per barrel, RBC reports.
A senior analyst of 'Uralsib Capital', Alexei Kokin, speaking to Vestnik Kavkaza, noted that the forecast of the International Energy Agency released last week, which is updated every month, is many ways similar to the reports of Goldman Sachs". "According to the IEA, the imbalance in the oil market will almost disappear by the end of the year. Therefore, we may expect that oil prices will rise to about $ 50. We also think so, therefore, I think that it is a reflection of a view that is becoming more common in the market. We can even say that it is becoming prevalent," he said.
According to the expert, the current trend of rising prices is "of sufficiently long-term nature, I mean the market is correcting itself, because the excess supply is gradually disappearing." "For example, US production is gradually falling, albeit rather slowly. Of course, the production in other regions will also gradually fall, particularly in other non-OPEC countries. Therefore, we will see rising prices for quite some time, the question is to what level," Alexei Kokin summed up.
An associate professor of the Graduate School of Corporate Management of RANEPA, Ivan Kapitonov, in turn, doubted such prospect. 'Of course, there will be no projected deficit in the market now, despite of the problems at the essential oil production and transportation facilities in Alberta. Saudi Arabia has declared it is willing to increase production to 11 million barrels per day, respectively, compensating the Canadian share. Therefore, we will not see any deficit of oil supply in the near future. Moreover, we must consider that Iran has not increased its production to the planned 4 million barrels per day yet, that is, there will be at least 300 thousand barrels more in the near future," he reminded.
"Summing up all this, we can say for sure that there will be no deficit, and the price of $ 50 seems quite excessive, considering the fact that US oil companies have not gone bankrupt yet. It is unlikely that prices will reach this mark in the second half of the year. This is possible only if US companies going bankrupt on a massive scale," Ivan Kapitonov concluded.
