Goldman Sees Risk of Oil Below $40 Without OPEC ‘Shock and Awe’
The Organization of Petroleum Exporting Countries must increase output oil production cuts aimed at shrinking a global glut. They need a public announcement to jolt investors. However, no such action is presently foreseen. In addition, there is no evidence of sustained declines in inventories or U.S. drilling activity. As a result, prices could slump below $40 a barrel. This according to Damien Courvalin and Jeffrey Currie wrote at Goldman.
OPEC production and exports actually increased in June. This was driven by Libya and Nigeria that are exempt from the group’s output curbs. Furthermore, rising #U.S. supplies and drilling activity have weighed on prices.