On Thursday, November 4th, Eastern Time, in December, production increased by 400,000 barrels per day. Some media said that this meeting also decided not to provide compensation and production increase mechanisms to member countries whose production is below the quota.
As a result, the previously hit crude oil futures staged a dramatic reversal on Thursday. U.S. oil and distribution oil rose short-term. However, oil prices turned down and U.S. stocks turned down during intraday trading. U.S. oil fell more than 5% from the intraday high, and both oil prices fell. Wearing 80 dollars, both hit a new low in a month.
Faced with such a roller coaster reversal, is the market warning us that oil prices have reached a high point?
According to Goldman Sachs, “the master of oil price advocacy,” this is not the case.
Goldman Sachs Commodity Analyst Damien Courvalin stated that his “The bullish view remains unchanged: the oil deficit has not yet been resolved; the current strong oil demand is still a near-term positive factor; and the growing structural deficit will require higher long-term oil prices”。
Goldman Sachs also said that it may only temporarily ease the pressure of price increases, and it may even be counterproductive next year. If crude oil prices fall sharply, the willingness of shale oil producers to increase drilling may be weakened, thereby further exacerbating the supply shortage. , And Iran’s possible resumption of nuclear negotiations are also factors that have affected oil price fluctuations in the near future.
Goldman Sachs, which is determined to “high oil prices”, saw three other catalysts after this OPEC+ meeting:
First, the consistency of OPEC’s decision makes it difficult for member states to agree to a faster increase in production, especially when half of OPEC+ members cannot meet the quota, including Russia, which is the second pillar of the agreement, which may oppose Saudi Arabia. Increase production unilaterally.
Second, the slow supply response of shale oil producers has allowed the group to restore its pricing power, making slow increases in production more financially beneficial.
Third, if the wealth effect is taken into account, the estimate of oil consumption expenditure per unit of GDP (based on retail prices covering 98% of global demand) shows that the current price is only the 63rd percentage point since 2000.
Goldman Sachs has always believed that 100 million barrels per day; the conversion from natural gas to oil demand may increase oil demand by at least 1 million barrels per day. But oil prices are not high enough to cause damage to demand. The oil price needs to reach $110/barrel before the market can return to equilibrium in the first quarter of 2022.
The same logic, it explains: the recent sustained strength of the US dollar will not disrupt the upward trend of commodities. With the rising global inflation expectations and the extremely special tension of commodities, the link between the strengthening of the US dollar and the performance of commodity prices has become very weak. This situation is particularly obvious in oil: while the dollar is rising sharply, the price of oil measured in the dollar continues to rise.
Going back further, Goldman Sachs, the “commodity standard bearer”, published an article in September that attracted the attention of the industry. After its successful prediction that oil prices will be the tipping point for the next round of commodity prices, it believed that the bullish commodity market needs to follow the basics. The principle of supply and demand: Regardless of the economic growth rate, as long as the demand is higher than the supply, the price will rise. At a time when commodity inventories continue to decline and demand levels will continue to rise.A small increase in demand will cause prices to soar.Return to Sohu to see more
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