Goldman Sachs said on Sunday that oil prices would continue to fall in the coming weeks, reasoning that a 'historic yet insufficient' deal by major oil producers to cut output is unlikely to offset a coronavirus-led demand rout.
- Goldman Sachs said on Sunday that oil prices would continue to fall in the coming weeks, reasoning that a “historic yet insufficient” deal by major oil producers to cut output is unlikely to offset a coronavirus-led demand rout.
The Organization of the Petroleum Exporting Countries and its allies, a grouping known as OPEC+, said they had agreed to reduce output by 9.7 million barrels per day for May and June to stem a slump in prices. Even with core-OPEC members fully complying with the cuts, and 50% compliance by all other countries that have agreed to curb production in May, the voluntary cuts would translate into a reduction of only 4.3 million bpd from first-quarter levels, the bank said.“Ultimately, this simply reflects that no voluntary cuts could be large enough to offset the 19 million bpd average April-May demand loss due to the coronavirus.
Goldman Sachs said, however, that risks surrounding its 2021 price outlook of $52.50 per barrel for Brent were “skewed squarely to the upside”, since the “violent market rebalancing” will be followed by a sharp rebound once demand picks up again.
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