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 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.
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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