By Saket Sundria, James Thornhill and Verity Ratcliffe
Data showed that China rebounded further in August as the world’s second-largest economy emerges from its coronavirus-induced slump. That helped push up global stocks for a second day, while U.S. Treasuries fell as investors moved out of havens.
Goldman Sachs Group Inc. in a note Sunday raised its year-end forecast for WTI to $45.50 from $40, and for Brent to $48 from $43.
“The market managed to remain in deficit despite a global second Covid-19 wave, with U.S. cases now declining without U.S. oil demand having to fall,” said Goldman analysts including Damien Courvalin and Huan Wei. The “fundamentals appear skewed to a faster re-balancing” given the rising likelihood of vaccines being available by the U.S. spring and that major oil-producing companies are keeping capital expenditure low, they said.
Even so, concerns that nations across the globe have yet to contain the virus are anchoring the WTI price around $43. The market is also contending with increasing production from OPEC+ countries as the group eases its historic output cuts from earlier in the year. And signs have emerged that Chinese crude purchases are starting to slow.
U.S. Gulf Coast refineries, meanwhile, are restarting following Hurricane Laura, which mostly spared the region’s energy infrastructure, muting its impact on global markets.
Laura was one of the most powerful hurricanes to ever hit Louisiana and U.S. Gulf Coast refiners halted around a third of gasoline and diesel production as the storm approached.
But hopes of prices edging toward $50 a barrel by September were “wishful thinking,” said Eugen Weinberg, Commerzbank AG’s head of commodity research. If oil stays at today’s levels, U.S. shale production probably won’t increase, he said.
U.S. explorers parked more rigs last week as stagnant prices push the industry to curtail activity. The number of active machines fell by three to 180, according to Baker Hughes Co. data released Friday.
See also: Saudis Seen Slashing Oil Price as Headwinds to Recovery Mount
“Oil still looks positive, but it’s going to grind higher rather than race because there are still concerns regarding the consumption side of the equation,” said Jeffrey Halley a senior market analyst for Asia Pacific at Oanda. “Whichever countries opened up, Covid-19 has made a return.”
Prices |
---|
|
Share This: