Goldman Sachs still expects the price of oil to climb back above $80 a barrel over the coming months, despite growing concerns over higher OPEC crude production, escalating trade wars and rising inventories.
Nonetheless, analysts at Goldman said the prospect of OPEC producers announcing an increase to crude production levels later this week could actually have a bullish impact on oil prices.
“Our updated global supply-demand balance continues to point to further declines in inventories and higher oil prices in the second half of 2018,” the bank said, reaffirming its previous Brent forecast of $82.50 during the summer.
“We continue, however, to view the risks to this forecast as skewed to the upside, even if concerns over demand and higher OPEC production weigh on prices near term,” Goldman added.
Alongside its allied partners, OPEC is scheduled to meet Thursday in order to decide production policy.
Analysts at Goldman predicted core OPEC and Russia production would increase by 1 million barrels per day (bpd) by the end of 2018, and by another 500,000 bpd in the first six months of 2019.
However, the impact of such a move would likely be offset by supply disruptions in Venezuela and Iran, Goldman added.
“Our updated fundamental oil balance shows… that the oil market remains in deficit with resilient demand growth and rising disruptions requiring higher core OPEC and Russia production to avoid a stock-out by year-end.”
Goldman Sachs still sees oil rallying over despite market concerns over key OPEC meeting