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BREAKING NEWS

Goldman Sachs sees oil prices steadying at current levels

Goldman Sachs sees oil prices steadying at current levels
FILE PHOTO: A sign is displayed in the reception of the Sydney offices of Goldman Sachs in Australia, May 18, 2016. REUTERS/David Gray -
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David Gray(Reuters)
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(Reuters) – Crude oil prices are likely to remain steady around current levels, as growing macro uncertainties, rising U.S. output and large availability of core OPEC nations’ spare capacity will offset supply constraints from Iran and Venezuela, Goldman Sachs said.

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 Organization 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 U.S. bank said in a note.

“The magnitude and velocity of the move lower were further exacerbated by growing concerns over strong U.S. production growth and rising inventories.”

Oil prices dropped to their lowest in three months on Monday, with Brent marking $60.55 per barrel and U.S. crude reaching $52.11 per barrel.

“We expect oil prices to likely remain volatile in coming months around their current levels and our Q3 forecast levels,” the investment bank said in the note dated June 2.

Increasing output from low-cost U.S. producers, debottlenecking in Permian region and the International Maritime Organization’s shift in bunker sulfur regulation in 2020 will lead to persistent backwardation, lower oil prices and tighter U.S. crude differentials, the note added.

(Reporting by Brijesh Patel and Nallur Sethuraman in Bengaluru; Editing by Rashmi Aich)

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