EIA raises estimate of crude production, expecting 11mbopd and av price of $62 this year.
Goldman sticks by its prediction of $82.
https://oilprice.com/Energy/Crude-Oil/U ... ected.html
Oil price: EIA vs. Goldman
Re: Oil price: EIA vs. Goldman
Just a few months ago we all would have been happy with $62.
I am using $60 WTI in all of my updated forecast/valuation models going forward. I was holding at $50.
I am using $60 WTI in all of my updated forecast/valuation models going forward. I was holding at $50.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil price: EIA vs. Goldman
Meanwhile, global financial turmoil is testing oil prices. WTI and Brent have retreated from recent highs over the last few trading days, dragged down by the global selloff. The enormous build up in bullish bets from hedge funds and other money managers presents a deeper downside risk.
But Goldman Sachs shrugged off the instability, and reiterated its bullish case for commodities for this year. In fact, the selloff increases the odds of more gains in the months ahead, Goldman analysts argue. “Commodities proved to work just as advertised” during the sudden selloff in equities, Jeffrey Currie, the bank’s head of commodities research, said in a Bloomberg Television interview. “In fact, you saw base metals and gold trade up as the equity market went down.”
“Historically, when you look at commodities they perform very well during rate-hiking cycles,” Currie said. “Oil’s what we called backwardated, where spot prices sit above forward prices, so you buy at a discount and roll up the curve. In other words, it pays you to be long.” The investment bank says there is no reason to abandon the bullish case for commodities for this year. Goldman predicts Brent will top $82 per barrel within six months.
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MY TAKE;
I posted here months ago that we would see a surge in U.S. oil production in December and January as upstream companies completed a lot of wells before year-end, so that the wells would be included in their year-end proven reserve reports. Those 3rd party reserve reports are extremely important to the upstream companies because they are the basis for their credit facilities.
I believe EIA and IEA wrongly assume that the production surge will continue going forward. Bad weather in January and February slows down completions.
Keep in mind that there are two sides to Supply and Demand. Demand ALWAYS spikes in the 2nd quarter. With the global economy picking up steam, we may see a record increase in demand from Q1 to Q2 this year. In 2017, demand for oil increased by 2.3 million barrels per day from Q1 to Q2 and kept increasing in Q3.
But Goldman Sachs shrugged off the instability, and reiterated its bullish case for commodities for this year. In fact, the selloff increases the odds of more gains in the months ahead, Goldman analysts argue. “Commodities proved to work just as advertised” during the sudden selloff in equities, Jeffrey Currie, the bank’s head of commodities research, said in a Bloomberg Television interview. “In fact, you saw base metals and gold trade up as the equity market went down.”
“Historically, when you look at commodities they perform very well during rate-hiking cycles,” Currie said. “Oil’s what we called backwardated, where spot prices sit above forward prices, so you buy at a discount and roll up the curve. In other words, it pays you to be long.” The investment bank says there is no reason to abandon the bullish case for commodities for this year. Goldman predicts Brent will top $82 per barrel within six months.
--------------------------------
MY TAKE;
I posted here months ago that we would see a surge in U.S. oil production in December and January as upstream companies completed a lot of wells before year-end, so that the wells would be included in their year-end proven reserve reports. Those 3rd party reserve reports are extremely important to the upstream companies because they are the basis for their credit facilities.
I believe EIA and IEA wrongly assume that the production surge will continue going forward. Bad weather in January and February slows down completions.
Keep in mind that there are two sides to Supply and Demand. Demand ALWAYS spikes in the 2nd quarter. With the global economy picking up steam, we may see a record increase in demand from Q1 to Q2 this year. In 2017, demand for oil increased by 2.3 million barrels per day from Q1 to Q2 and kept increasing in Q3.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group