Goldman: Q4 Oil Supply-Demand Balance Is 'Weaker Than Previously Expected'

Analysts at Goldman Sachs, led by Damien Courvalin, previously forecast the global oil market to be characterized in the fourth quarter by a 300,000 barrel per day draw.

On Tuesday, the analyst revised his forecast from a 300,000 barrel a day shortfall to now a 400,000 barrel per day surplus. However, Courvalin cautioned that his revised forecast assumes a "limited" incremental oil output from Libya and Nigeria of 90,000 barrels per day.

Courvalin pointed out that while OPEC member nations are currently meeting in Algiers, the outcome of these meetings "remains uncertain."

As a result of the now anticipated surplus of oil in the fourth quarter, Courvalin slashed his oil price forecast for the fourth quarter to $43 per barrel from a previous $50 forecast.

Related Link: If No Opec Deal Is Reached, Price Of Oil Will "Hit $40 Well Before It Has Any Chance Of Hitting $50"

Nevertheless, the firm's 2017 outlook remains unchanged as supply and demand will remain in balance. Moreover, demand growth for oil will remain "resilient" and greater than expected production declines in the U.S., Mexico, Venezuela, Brazil and China will be offset by new project ramp ups in Canada, Russia, Kazakhstan and the North Sea.

In addition, Iran, Iraq and Venezuela have each guided over the past month to a 250,000 barrel per day rise in production next year, while this may or may not change pending the OPEC meeting.

Accordingly, the price of oil is still projected to trade at average price of $52 per barrel on average next year.

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