Bengaluru: Crude oil prices are likely to remain steady around current levels, as growing macro uncertainties, rising US output and large availability of core Opec nations’ spare capacity will offset supply constraints from Iran and Venezuela, according to Goldman Sachs.
The United States spooked markets worldwide with oil supply worries last month after it reimposed trade sanctions on Iran, one of the major global oil suppliers, bringing focus back on the Organisation of the Petroleum Exporting Countries (Opec).
Crude markets posted their biggest monthly losses in six months in May amid stalling demand and as trade wars fanned fears of a global economic slowdown.
“Escalating trade wars and weaker activity indicators have finally caught up with oil market sentiment,” the US bank said in a note.“The magnitude and velocity of the move lower were further exacerbated by growing concerns over strong US production growth and rising inventories.”
Oil prices dropped to their lowest in three months yesterday, with Brent marking US$60.55 per barrel and US crude reaching US$52.11 per barrel.
“We expect oil prices to likely remain volatile in coming months around their current levels and our third quarter forecast levels,” the investment bank said in the note dated June 2.
Increasing output from low-cost US producers, de-bottlenecking in Permian region and the International Maritime Organisation’s shift in bunker sulfur regulation in 2020 will lead to persistent backwardation, lower oil prices and tighter US crude differentials, the note added. — Reuters