(Reporting by Arundhati Sarkar in Bengaluru. Edting by Gerry Doyle)
twitter.com/Arundhati_05; +1 646 223 8780 Ext: 2776)) (Corrects production cut figure in fifth graph)
April 4 (Reuters) - Goldman Sachs says crude oil
production cuts by OPEC could result in a significantly larger
deficit in the market, driving a rally in prices to $100 per
barrel by April 2024, and raising the group's pricing power.
OPEC+, which groups the Organization of the Petroleum
Exporting Countries with Russia and other allies, agreed on
Sunday to widen oil supply cuts to 3.66 million barrels per day
(bpd), which helped push up prices above $86 per barrel.
Goldman said it sees "elevated OPEC pricing power - the
ability to raise prices without significantly hurting its demand
- as the key economic driver", and estimates that the production
cut will raise OPEC+ revenues as the boost to prices more than
offsets the drop in volumes.
Brent crude futures were trading at $85.31 a barrel
on Tuesday. Goldman also said it expects a nearly 90% implementation
rate for the 1.16 million bpd production cut plan, reasoning
that countries that announced an additional cut have a strong
compliance track record, and had implemented nearly 90% of the
October 2022 cut by January 2023.
The bank further reiterated its view that the market will
return to sustained deficits from June onward given rapid
emerging market growth, falling Russia supply, and sluggish U.S.
supply.
Goldman on Monday had raised its price forecast for Brent
for December 2023 by $5 to $95 a barrel.
Barclays also said it sees a $5 upside to its $92 per barrel
price target, while Jefferies noted Brent prices could still end
the year at $96 per barrel.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.