Goldman Sachs: Oil prices should decrease further to balance supply and demand
by Daily Sabah with Wires
ISTANBULAug 08, 2015 - 12:00 am GMT+3
by Daily Sabah with Wires
Aug 08, 2015 12:00 am
In its New Oil Order report, Goldman Sachs suggested oil prices must continue to decrease for some time to restore the supply-demand balance. According to the report, the global excess supply of oil is 2 million barrels a day, and there is a downside risk as the oil market seeks a new equilibrium point. The report highlighted that a total of 170 million barrels of oil had been stored since January, while there are 50 million barrels of oil being held in storage tanks. The report underscored that the reason for the excess supply is the near full capacity production of countries that can produce oil at low cost, particularly Saudi Arabia, Iraq and Russia.
Goldman Sachs warned that in case of an increase in investments in Iran following the nuclear deal, the daily oil production of Iran could go up by 200,000-400,000 barrels. The report indicated that the oil industry has not yet suffered enough to feel real financial stress, and underscored that investors are skeptical about an increase in oil prices any time soon, which makes the restoration of supply-demand equilibrium more difficult. After that point, the price of Brent crude climbed about 40 percent to reach $70 a barrel in May. However, it started falling once again, starting in August, and is currently being traded at $49 a barrel.
Global oil demand is falling as Asian and European economies are slowing down. Specifically, China and other developing countries demand less oil than before, the report said. The price of a barrel of Brent crude, which serves as a benchmark for oil prices, dropped from $115 in June 2014 to less than $46 in mid-January - a 60 percent decrease.
Keep up to date with what’s happening in Turkey,
it’s region and the world.
You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.