March 27 Goldman Sachs on Sunday said an
extension of the joint OPEC and non-OPEC oil production cut is
not warranted unless supply and demand fundamentals deteriorate.
The Organization of the Petroleum Exporting Countries (OPEC)
and other major producers should be wary of extending the cuts
unless there is a weakening of global oil demand or output from
Libya or Nigeria increases, the bank said in a note from
analysts led by Damien Courvalin.
"Our assessment of oil fundamentals and the rationale behind
the production cuts do not warrant, in our view, such an
extension barring either a sharp deceleration of demand growth
or a sharp rebound in Libya/Nigeria production," the bank said
in March 26 note.
"We believe that the rebalancing of the oil market is in
fact making progress despite the record high U.S. crude
After a meeting on Sunday in Kuwait, a joint committee of
ministers from OPEC and non-OPEC oil producers agreed to review
at its next meeting in April whether the global pact to limit
supplies should be extended by six months beyond its expiration
at the end of June.
Goldman Sachs said that while it is beneficial for low cost
crude producers to accelerate "the normalization" of oil
inventories, they should not target huge price rebounds.
"Oil prices above $60 per barrel would prove self defeating
in our view given the flattening of the oil cost curve and the
unprecedented velocity of the shale supply response," the bank
Oil prices dipped on Monday as rising U.S. drilling activity
outweighed the possibility that the production cut would be
(Reporting By Nallur Sethuraman in Bengaluru; Editing by