The rebalancing in the global oil market will continue for a little while longer but the bets are still on that oil could rise to $59 a barrel in the second quarter of 2017.
A report by Goldman Sachs says although prices are now at pre-OPEC deal levels, higher demand will keep prices above $55/bbl.
“We continue to expect, however, that OECD inventories will continue their decline, as high compliance to the OPEC cuts and strong oil demand absorb higher US production” Goldman Sachs said in the report.
It added, “. It is important to emphasize, that this bullish price forecast is a view on the shape of the oil forward curve.”
The market is characterized today by record high US crude stocks but inventories have continued to decline elsewhere in the world.
Shale producers in the US remain in growth mode with rig count rising 14 to 631, the highest in the US since September 2015 according to Baker Hughes Inc.
US drillers have added 106 rigs since 2017 began.
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