Oil prices slide as Goldman Sachs says OPEC+ unlikely to raise production levels

News follows calls by White House on OPEC and its allies to raise its levels of oil output

Goldman Sachs said the USA’s plea to OPEC+ to increase output is unlikely to bring about higher production levels in the short-term as the Delta variant remains a threat to demand.

Earlier this week, the White House called on OPEC and its allies to raise its levels of output in a bid to keep rising fuel prices under control, as inflation in America reaches its highest yearly growth rate in 13 years.

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“We don’t see the recent White House statement as threatening the current market deficit nor the pace of the rebalancing in 2H21,” Goldman Sachs said in a note dated Thursday.

The investment bank maintained its end-of-year forecast for Brent crude oil at $80 per barrel.

Oil prices slid on Friday, with Brent crude 0.8% lower at $70.74 a barrel, while US crude down almost 1% to $68.44 a barrel.

Goldman also said that an additional increase in OPEC+ production by the end of the year is required to balance out recent supply issues across the world. The investment bank expects OPEC+ spare capacity to return to normal levels by spring 2022.

OPEC and its allies reached an agreement in July to increase oil supply in an effort to keep soaring crude oil prices under control.

The group’s plan is to pump an additional 400,000 barrels per day each month during August, increasing output by 2m barrels per day by the end of 2021. 

“Looking beyond the Delta headwind, we expect the demand recovery to continue alongside rising vaccination rates,” Goldman Sachs said.

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