OPEC+ output increase adds to Goldman's bullish oil market view
Reuters
Published Dec 03, 2021 08:54
(Reuters) - Goldman Sachs (NYSE:GS) said current oil price levels offer 'compelling' opportunities for investors to reposition for an ongoing structural bull market and OPEC's decision to increase output only supports this upbeat view.
The Organization of Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, agreed on Thursday to stick to their existing policy of monthly oil output increases.
"Slower shale production growth will come at the cost of a faster normalisation in OPEC spare capacity, which would turn particularly bullish if no deal with Iran is agreed to in 2022," the bank said in a note dated Thursday.
The decision adds upside risks to its $85-per-barrel (bbl) Brent forecast for 2023, the bank added.
Morgan Stanley (NYSE:MS) analysts also said the OPEC+ decision softened its estimated oil market balances for the first half of 2022 but said the market will likely return to undersupply and inventory draws from mid-2022 onwards.
"It will probably take some time for the oil market to find its footing again" Morgan Stanley analysts cautioned in a research note dated Thursday.
Oil prices climbed on Friday, extending gains after OPEC+ said it would review supply additions ahead of its next scheduled meeting if the Omicron coronavirus variant dents demand.
Goldman said oil prices would need more information on the virulence of Omicron to recover in the short-term and evidence of a tight physical market for a return above $80/bbl, in the absence of increased risk appetite.
"Lower prices that are now likely to persist in coming weeks may reduce the urgency in coming to a deal with Iran, which would have provided additional barrels to help cope with a tight oil market," the bank added.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.