Goldman Sachs says this will give the oil market recovery legs
Goldman Sachs said that stable declines in non-Opec production will be key to whether oil markets recover in a sustainable fashion.
The bank's base scenario predicts a sustained deficit in the third quarter of the year, until which crude prices are expected to hover around current levels.
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A sharper-than-expected decline in US output could send oil prices higher, throwing a lifeline to cash-strapped shale producers which are being priced out of the market.
Brent crude, the global benchmark, rose 1.3 per cent to $44.2 per barrel this morning, as traders looked through thin spare capacity margins and supply outages from the Canadian wildfire.
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In a separate note, the Wall Street stalwart reduced its forecast for the decline in US oil output this year due efficiency gains and technological improvement.
"Overall, we view US productivity gains and a narrower US decline as indicative of the secular shale productivity trend we see keeping long-term WTI oil prices in the $50-$60 per barrel range," it said.