The Brent oil price fell more than 1% last night as Goldman Sachs remained bearish in a new report. As I write the price is at $59.24. From Goldies:
Weather, violence or sanction-related supply disruptions in Iraq, Libya and Iran have taken 885 kb/d off the global market in January-February relative to December. While there are risks that the violence-related disruptions extend in Libya, normal weather in Iraq could see exports recover by 300 kb/d in March with Iran potentially adding another 265 kb/d in April. All along, Russia, Brazil, Saudi and US production have continued to grow sequentially.
…Weather has played a great part in keeping crude off the market, disrupting Iraqi exports (sandstorms) with cold weather in the US and drought in Brazil supporting demand. And while we reiterate our out-of-consensus view that demand growth will be strong in 2015, on the back of better economic growth and low oil prices, we did not expect demand to be so strong this soon with recent leading economic indicators suggesting that the activity pull is sequentially weakening. Our expectation going forward is therefore for the global crude inventory build to resume. As a result and absent further unexpected OPEC disruptions, we expect Brent oil prices and timespreads to reverse their recent strength although the lack of a meaningful build in the past few months leaves risk to our forecast for oil prices remaining at $40/bbl for two quarters skewed to the upside.
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