Coordinated cuts would be "self-defeating", says Goldman Sachs
Opec, Russia coordinated oil output cuts unlikely: Sachs
NEW YORK, February 1, 2016
Coordinated oil production cuts between Opec producers and Russia are "highly unlikely" since a deal would require further cooperation between Opec members amidst Iran's growing production and ongoing rift with Saudi Arabia, Goldman Sachs said on Sunday.
Furthermore, coordinated cuts would be "self-defeating" since the higher prices as a result of an announcement of cuts would bring shale oil production back into the market quickly since previously shut wells would restart at prices above $40 a barrel, the bank said.
Oil prices rebounded last week from 12-year lows on indications of talks between Russian officials, Saudi Arabia and other OPpec members to cut output up to 5 percent.
Oil prices will have to trade between $40 a barrel and $20 in the first part of 2016 in order to curtail supply enough to balance the crude market, said Goldman
"We reiterate our view that prices need to remain low enough to force fundamentals to create the adjustment back towards a new equilibrium," Goldman analysts said in a note.
Oil prices will average just over $40 this year, the biggest cut to monthly forecasts in a year, as an influx of Iranian barrels hits an already-saturated world market, a Reuters poll showed on Friday, --Reuters
