Oct 11 Goldman Sachs said a planned oil output
cut by producer cartel OPEC and other exporters like Russia has
become a "greater possibility", but warned that any reduction
likely won't be deep enough to re-balance markets in 2017.
"Higher production from Libya, Nigeria and Iraq are reducing
the odds of such a deal rebalancing the oil market in 2017,"
Goldman analysts said in a note to clients dated Oct. 10.
Any failure to reach such a deal, however, would push prices
sharply lower to $43 per barrel as the global oil market will
still have surplus crude in the fourth quarter.
OPEC's top producer Saudi Arabia said on Monday that a
global deal to cut supplies could be reached at the group's next
formal meeting in November, when non-OPEC nations such as Russia
could be invited to join in the pact.
Russian President Vladimir Putin told an energy congress on
Monday that Russia was ready to join a proposed cap on oil
output by OPEC members.
Goldman said Saudi Arabia likely holds the reins to the
production cut agreement, with signs of elevated funding stress
potentially driving Saudi to commit to a cut when OPEC meets
officially on November 30.
OPEC officials are embarking on a flurry of meetings to nail
down details of the deal in Algiers, where modest oil output
cuts were agreed in the first such deal since 2008.
"As usual, risks of a disagreement are not negligible with
Iraq currently the most vocal opponent, aiming to grow
production next year and disputing usual measures of its
production as too low," Goldman analysts said.
The bank said it sees price-insensitive upside risks to
global oil production from the countries outside OPEC and
expects them to aggravate supply with 40 percent more new
projects in 2017 from 2016.
Goldman said even if OPEC producers and Russia implemented
strict cuts, higher prices would allow U.S. shale drillers to
"Demand growth will remain resilient in our view but the
historical activity and price sensitivities suggest less growth
at higher oil prices," the investment bank said.
(Reporting by Nallur Sethuraman in BENGALURU and Henning
Gloystein in SINGAPORE; Editing by Tom Hogue)