Goldman Sachs said on Sunday that oil prices will continue to decline in the coming weeks, saying that a "historic insufficient" deal by the major oil producers to reduce production is unlikely to offset the demand path that the Corona pandemic caused.
OPEC and its allies, a group known as OPEC +, said they agreed to cut production by 9.7 million barrels per day in May and June to halt the price drop.
The bank sees negative risks to short-term oil price expectations at around $ 20 a barrel for Brent crude, but it expects Brent crude to outperform US oil because OPEC + producers' exports are likely to decrease, freeing up floating storage space.
Even with OPEC core members fully complying with cuts, and 50% compliance by all other countries that agreed to curb production in May, voluntary cuts would translate into only 4.3 million barrels in first-quarter levels, and the bank added that significant production cuts by group countries Twenty won't help much.
Brent crude futures slumped and fell by 65.55% in the first quarter, while the West Texas Intermediate recorded temporary gains after the OPEC + deal.
On the other hand, Morgan Stanley raised its forecast for oil prices, saying that although the OPEC + deal will not prevent sharp stockpiles from accumulating in the coming months, it will lead to stock cuts from the second half of 2020 onwards.
Moreover, Morgan Stanley raised its forecast for Brent crude and West Texas crude in the third quarter to $ 30 a barrel from $ 25, and to $ 27.50 a barrel from $ 22.50, respectively. He also raised his forecast for the last quarter by $ 5 a barrel each to $ 35 for Brent crude and $ 32.50 for West Texas Intermediate crude. Morgan Stanley also expected the oil demand to drop by about 14 million barrels per day year on year in the second quarter.
