Goldman Sachs said it viewed the OPEC+ meeting as bearish despite the output cuts extension, and expected downside risks to the $75-$90 Brent price range as some countries had already signaled the gradual phaseout of extra voluntary cuts.
The Organization of the Petroleum Exporting Countries and its allies including Russia, agreed a complex deal on Sunday to extend their deep production cuts well into 2025.
OPEC+ members are currently cutting output by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand. The group will curtail production by 5.86 million bpd until the end of September 2024 and gradually add barrels to the market to reach cuts of around 3.66 million bpd by October 2025.
“A surprisingly detailed default plan to unwind extra cuts makes it harder to maintain low production if the market turns out softer than bullish OPEC expectations,” Goldman Sachs said in a note dated Sunday.
In May, OPEC stuck to its forecast for strong growth in global oil demand, expecting world oil demand to rise by 2.25 million bpd in 2024 and by 1.85 million bpd in 2025.
The bank said that OPEC’s “very bullish demand forecast” was well above its forecast of 1.5 million bpd and it projects moderate downside risk due to softness in diesel demand.
Brent futures for August delivery were down 10 cents, or 0.12%, to $81.01 a barrel at 0453GMT, after falling to a session low of $80.55. U.S. West Texas Intermediate (WTI) crude futures for July delivery slipped 6 cents, or 0.08%, to $76.93, after falling to $76.39 earlier.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich)