The price of the American oil benchmark, West Texas Intermediate got back to $33 a barrel after reaching below $28. Now it’s rumored that the OPEC nations, controlling the word’s oil, are going to cut their oil output.
However, analysts of Goldman Sachs don’t agree with this market sentiment. From their point of view, the surge in oil prices is going to be short-lived. The rally will fade away once the market realizes OPEC doesn’t intend to cut output.
Both OPEC and Saudi Arabia share one objective – to knock out American shale oil industry. By simply flooding the entire world with oil and cutting its price, OPEC expects shale oil producers to lose their revenue. Additionally, this output cut would relieve pressure on non-OPEC oil producers.
Though some energy company executives state that oil might reach the mark of $50 or even $60 within the next two years, the bank’s analysts disagree. According to Goldman Sachs, the inflection phase requires oil prices to stay between $40 and $20 a barrel until 2H16. The phase will boast a trend-less and highly volatile market with still price lows.
The epoch of extremely cheap oil will most likely resume, and OPEC will make more attempts to hurt the US shale industry before letting the oil price soar again.