Goldman Sachs cut its oil price guidance to $43 per barrel for the fourth quarter, down from its previous outlook of $50 per barrel. The bank said that any short-term price support from a possible agreement among leading oil producers to reduce output could be overshadowed by a rising crude surplus.
However, the bank kept its average price outlook of $52 per barrel for 2017.
Goldman stated in a note that ‘’with our demand outlook unchanged, with year-on-year growth of 1.4 million barrels per day, this leaves us now forecasting that inventories will build in 4Q16 by 400 kb/d (thousands of barrels per day) vs. our prior expectation for a 300 kb/d draw during the quarter.”
The oil producing countries are set to meet in Algiers tomorrow to tackle a prolonged supply glut, but the chances of any potential supply deal faded after statements from Iran and Saudi Arabia about the meeting.
Iranian Oil Minister Bijan Zanganeh said it is not the time to make a decision. Zanganeh added that Iran will try to reach a deal in November. He was referring to the next OPEC meeting that will take place in Vienna on 30th of November.
Talking about the Algiers meeting, Saudi Arabia’s Energy Minister Khalid al-Falih said ‘’this is a consultative meeting. We will consult with everyone else, we will hear the views, we will hear the secretariat of OPEC and also hear from consumers.”
Oil prices have declined over 50 percent since June 2014 amid a continued supply glut, which has prompted OPEC producers to take initiatives to stabilize prices in order to boost margins. However, the efforts haven’t paid off so far due to a serious political rivalry between Saudi Arabia and Iran.