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James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

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The Oil Price Rebound Will Be Brief – Goldman Sachs

Oil Rig

Goldman Sachs has rejected analysts’ opinions that the global oil market is recovering, noting that while it expects a “modest” deficit in the coming months based on the slight rebound in oil prices, the market will again be in a state of surplus by early next year.

It may seem as if oil is recovering on the back of supply disruptions that have helped to chip away at the global glut and push prices close to $50, but Goldman says that in the best-case scenario this isn’t a rebound—it’s just the first signs of one.

Goldman Sachs’ analysts point to the restart of Canadian oil sands production following the devastating wildfires, and OPEC’s stay-the-course production as two indications that the a surplus is in store for early next year. They also note that non-OPEC production could be less than what was previously anticipated due to the slight price recovery that has producers pumping again.

Goldman Sachs’ predictions echo those released Tuesday by the International Energy Agency (IEA). The Agency had earlier predicted that the 2016 oil stockpile would reach 1.5 million barrels per day. Now, it expects that figure to be 800,000 bpd—a 40-percent lower surplus than estimated just a month ago. Related: Low Oil Prices See China’s Oil Output Shrink 7.4%

However, for next year, the IEA predicts that the market will tip into surplus again, as early as the first quarter of 2017. Though the oil market is now in balance, the agency said, and next year’s demand growth is likely to reach 1.3 million barrels per day, for the year as a whole, “there will be a very small stock draw of 0.1 million.”

“Again, on the planning assumption that OPEC oil production grows modestly in 2017, we expect to see global oil stocks build slightly in the first half of 2017 before falling slightly more in the second half of 2017,” the IEA said.

By James Burgess of Oilprice.com

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  • The Contrarian on June 28 2016 said:
    Does anyone really take Goldman Sachs seriously anymore?
  • Wes on June 28 2016 said:
    I agree with Golman.
  • jj on June 28 2016 said:
    Lets see: Oil was $147.00 Goldman stated oil was going to $200.00 ; Oil was moving up to $40.00 (now $47.50) but Goldman said its going back down to $18.00..(This is just a few pearls of wisdom from Goldman).


    Goldman is right on tract, and thank you for stating oil is going down, we should see higher prices..
  • TheJack on June 28 2016 said:
    Are any of these pundits taking into account that KSA is exporting and using more than they are producing? What about Venezuela? GS is hoping to get it drop like they did last year so they can short and cash in, then jump in long once everyone realizes the bigger picture and cash in again.
  • PaulApp on June 29 2016 said:
    Remember that Goldman Sachs is in for the money! They are telling half of the story will leaving the other half a secret so Goldman Sachs can profit.
  • HO on July 01 2016 said:
    well, they did call it in 2005 when Murti said its going to 100 dollars when the markets have forgotten about oil the fact that oil even trades.
    will be fun seeing all these ETFs scrambling over each other to get out
  • Dirk on July 01 2016 said:
    Goldman is all over the place reporting different forecasts every time you turn around. I dont put any thought into what they report on.

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