Goldman Sachs, the world’s leading investment bank, is bullish on oil for the coming year. The sentiment results from a readily accessible reason: oil-producing countries, both OPEC members and their allies, have begun demonstrating serious intent to keep their word by curbing output. At the OPEC meet in November, these countries even extended the production curbs that have been in place for a while now.
Prices Rising to $60 Levels
With the oil output of OPEC countries expected to fall by 350,000 bpd to about 44 million bpd, Goldman Sachs believes that oil prices will find considerable support. The group sees prices rising from their current level in the $55 range, to as much as $62 in 2018. The group, heavily invested in oil, expects a 9% return from its investments over the next year.
Drillers Investing in Operations
All said, Goldman expects global oil inventories to drop to their five-year average in 2018. According to Sigma Drilling Technologies, a major producer of pulsation solutions for oil drillers, this means that prices will rise and U.S. shale producers can step in to take advantage of them.
The opinion of the manufacturer of mud pump pulsation dampeners is seconded by Citigroup, which has predicted that while prices will rise, the rise will be slowed down for the simple reason that American drillers will rush to take advantage. This means that inventories will begin to rise once again, with a modest slowdown in the speed at which prices rise. With many oil drillers planning to bring production online, prices are likely to taper at some point.
A Good New Year
Until then, it promises to be a lively ride, one that American drillers should be well set to take advantage of. With investments being poured into added capacity and maintenance of drilling operations, the new year looks set to be one of the best in recent memory.
