Goldman Sachs has downgraded its forecast for oil prices over the next quarter amid a sudden uptick in shale drilling and an unexpected surge in production from Libya and Nigeria.
The investment bank now points to a three-month average of $47.50 per barrel for WTI crude, down from its previous estimate of $55.00 a barrel.
“The fast ramp-up in shale drilling and the unexpectedly large rebound in Libya/Nigeria production are on track to slow the 2017 stock draws,” Goldman Sachs analysts said in a research note published late Wednesday.
The rebound in production from Libya and Nigeria – two countries which were exempt from OPEC’s historic November deal to curb output – could offset inventory declines in the third quarter of this year, Goldman Sachs analysts warned.
“This creates risks that the normalization in inventories will not be achieved by the time the OPEC cut ends next March. We expect this will leave prices trading near $45 (a barrel) until there is evidence of a decline in the U.S. horizontal oil rig count, sustained stock draws or additional OPEC production cuts,” the analysts said in the note.
via CNBC
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Alfonso Esparza
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
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