Crude oil rebounded slightly on Tuesday after a crash on Sunday night that sent markets reeling Monday. The crash happened after Saudi Arabia dramatically slashed its prices in response to Russia’s refusal to cut its own output, ruining an OPEC+ deal to lower production amid weak demand due to coronavirus.Now Goldman Sachs oil strategist Damien Courvalin is predicting crude oil prices will remain low, near $30 per barrel (WTI crude was at $60 per barrel in January), for at least the next six months.
“That’s the time it will take to get rebalancing necessary,” Courvalin told Yahoo Finance, “to reflect what has been an important structural shift, which is the end of the artificial OPEC cut, and a strategy now of gaining market share.”Russia’s refusal to further cut its output marked an ugly breakup between Russia and Saudi, but Russia’s motivation was actually more of a shot at American shale frackers (who benefit from the OPEC+ cuts) than at Saudi.“If you look at the rhetoric so far, it seems that it’s Saudi vs Russia, but they’re on the same side of what is happening,” Courvalin says. “They’re both low-cost producers with significant spare capacity. In our view, they will both benefit if they continue to gradually grow production.”
In response to Russia’s moves, Saudi on Wednesday directed its oil giant Saudi Aramco to raise production to 13 million barrels per day, up from 9.7 million per day in February....MORE
There's nothing the charts can tell us, this is a battle of wills.
