• 3 minutes Biden Seeks $2 Trillion Clean Energy And Infrastructure Spending Boost
  • 5 minutes While U.S. Pipelines Are Under Siege, China Streamlines Its Oil and Gas Network
  • 8 minutes Gazprom fails to exempt Nord Stream-2 from EU market rules
  • 35 mins China wields coronavirus to nationalize American-owned carmaker
  • 4 hours Trumpist lies about coronavirus too bad for Facebook - BANNED!
  • 8 hours The Truth about Chinese and Indian Engineering
  • 7 hours China's impending economic meltdown
  • 10 hours Why Oil could hit $100
  • 1 day The World is Facing a Solar Panel Waste Problem
  • 3 days The Core Issue Of US Chaos..Finally disclosed
  • 17 hours Pompeo upsets China; oil & gas prices to fall
  • 4 hours Renewables Overtake Coal, But Lag Far Behind Oil And Natural Gas
  • 8 hours Open letter from Politico about US-russian relations
  • 8 mins Rational analysis of CV19 from Harvard Medical School
  • 12 hours Brent above $45. Holding breath for $50??
  • 2 days Sell Natural Gas Benefits to Grow the Market!
  • 2 days Trump Suggests Delaying Election Amid Fraud Claims
Will Low Prices Save Long-Term Oil Demand?

Will Low Prices Save Long-Term Oil Demand?

Will low gasoline prices will…

Oil Drops As Demand Recovery Stalls

Oil Drops As Demand Recovery Stalls

After rising at the start…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Goldman Sachs: OPEC’s Influence On Oil Prices Is Dwindling

In a research note, Goldman Sachs has effectively demoted OPEC from a price setter to a mere inventory manager, with the cartel’s long-term control over international oil prices diminishing thanks to shale, which sports much faster returns: 6-9 months from final investment decision to peak production versus several years for conventional oil. The lengthy process of conventional oil is precisely what gave OPEC the ability to pull the strings of international prices.

Goldman commended OPEC on its decision to cut production, adding, however, that it had an opposite to the desired effect by “underwriting” shale oil production, and spurring the growth in it that we are now witnessing.

The investment bank also has some bad news for the oil industry, noting that the period between this year and 2019 will see a hefty increase in global oil production thanks to large-scale investments made in 2011-2013. In fact, Goldman expects the possible addition of 1 million barrels of crude to global daily output in the period.

There is some uncertainty as to whether all these mega projects will deliver in line with expectations, given the oil industry’s history of failing to do this, but delivery has improved in the last three years, so the 1 million barrels are a real possibility. Related: Trump’s Budget: Valuing Military Over Energy

In this context, Goldman says, OPEC has a dilemma: should it extend the production cuts to prevent prices from falling further—extending the invite for U.S. shale to come on in fuller force, or should it let them fall to avoid the risk of losing long-term market share, but crippling OPEC members’ bottom line.

Several OPEC members have already expressed their readiness to take part in an extension of the cut or have at least acknowledged the need for such an extension. Even Saudi Arabia, OPEC’s largest producer, has softened its stance from being previously unwilling to further strengthen U.S. shale by extending the deal, to saying it would back an extension if inventories remain high.

Meanwhile, benchmark prices were dealt another blow by the American Petroleum Institute, which yesterday reported a 4.5-million-barrel increase in U.S. crude oil inventories, exceeding analyst expectations of a build half that large.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News