It is highly likely that some of the most powerful oil producers in the world will take further action to stem the price decline and try to balance the market, according to Goldman Sachs.
OPEC and non-OPEC producers, an influential energy alliance known as OPEC+, are scheduled to meet in Vienna, Austria on December 4 to decide on the next phase of production policy.
comes middle recession fearsAnd the Weak demand for crude oil in China From the renewed Covid-19 lockdowns and as market participants evaluate A looming effect of a western ceiling on Russian oil prices.
Jeff Currie, global head of commodities at Goldman Sachs, said Tuesday that a combination of factors drove the bank to lower its forecast for oil prices in the past months.
“First and foremost, it was the dollar. What is the definition of inflation? Too much money chasing…too few commodities,” Corey told CNBC’s Steve Sedgwick at the Carbonnomics conference in London.
He continued: The second factor “has to do with Covid and China – and by the way, it’s big.” “It’s worth more than the November OPEC cuts, let’s put it in perspective. And then the third factor is Russia is pushing barrels into the market right now ahead of the December 5th export ban deadline.”
Currie said the medium-term oil outlook for 2023 was “very positive” and that the bank plans to “stick to our guns” with a forecast of $110 a barrel for Brent crude for next year.
But he acknowledged there was “a lot of uncertainty” ahead.
Oil prices have fallen in recent months. international standard Brent Crude futures, which hit $100 a barrel in late August, were trading at $85.46 a barrel Tuesday afternoon in London, up 2.7% for the session.
we Midwest Texas Meanwhile, futures were trading at $79.09 a barrel, up more than 2.4%.
Oil demand is “going south” in China
“It’s likely that demand will go south again in China given what’s going on,” Currie said.
“I think the key point with China right now is the risk of you being forced to reopen. And that means it’s going to be a self-imposed lockdown where people don’t want to get on trains, they don’t want to go to work and the demand goes south.”
Currie said OPEC producers would need to discuss whether to absorb further weakness in demand in China.
“I think there is a high probability that we will see a reduction,” he added.
OPEC+ Agreed in early October To cut production by 2 million barrels per day from November. This came despite US calls for OPEC+ to pump more to lower fuel prices and help the global economy.
And OPEC+, led by Saudi Arabia and Russia, cut production at a record rate 10 million barrels per day In early 2020 when demand dropped due to the Covid-19 pandemic. Since then, the oil cartel has phased out those record cuts, albeit with several OPEC+ nations struggling to meet their quotas.
OPEC + has recently behold It could impose deeper production cuts to spur a recovery in crude oil prices. The signal came despite a report from the Wall Street Journal indicating that a production increase of 500,000 barrels per day was under discussion on December 4.
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