Goldman Sachs Group Inc. raised its short-term oil price forecast amid the increased likelihood that OPEC will reach an agreement to cap production at its meeting on November 30.
Economists at Goldman Sachs believe that Russia will also come to an agreement to freeze oil production at current levels.
Goldman expects Brent crude price to rise to $50 a barrel in the fourth quarter, up from the previous estimate of $43. In the first and second quarters, oil price forecast is $56.5 a barrel, compared with $47 and $52 a barrel, respectively.
WTI crude price is expected to rise to $48.5 a barrel in the current quarter, up from the previous estimate of $43 a barrel. Meanwhile, Goldman predicts WTI price to average $55 a barrel during the first half of 2017 compared with the previous forecast of $47.5 a barrel.
“We now believe that there is a strong rationale for low-cost producers to deliver a swift production cut to normalize inventories,” analysts at Goldman noted.
In the long term, fundamentals that influence the market are the same. Shale oil producers, particularly the US ones, will reduce the cost of production, while OPEC nations will continue to fight for market share.
In the meantime, oil prices rose on the back of statements from Iran, Iraq and other oil producers that they may cut some of their production.
On Monday, Brent oil for January delivery traded at $47.5 a barrel, up 1.37% on the ICE Futures Exchange.
WTI oil for delivery in December moved up by 1.12% to $46.2 on NYMEX.
