OPEC cut motivates near-term forecast upgrade for oil – Goldman Sachs

Research Team at Goldman Sachs, suggests that the increased likelihood of an OPEC cut motivates their near-term forecast upgrade for oil.

Key Quotes

“Stronger than expected demand growth and lower production from high cost countries increase our confidence that the global oil market will shift into deficit by 2H17 even with OPEC production above current levels. Thus, there is now a stronger incentive for OPEC producers to halt inventory growth in 1H17 and normalize the current high level of inventories with a short-duration production cut. We think a cut should generate backwardation – helping OPEC grow market share by sidelining higher-cost producers – and reduce oil price volatility – increasing the valuation of their debt and equity.”