The crude market may be starting to rebalance as US production declines and output disruption from non-OPEC countries could potentially slash global oversupply, according to the Goldman Sachs Group.
“Storage constraints and a still large oversupply in coming months will continue to keep prices in a trendless and volatile range,” the Goldman report said.
The report expects oil to trade at $25 to $45 per barrel in the second quarter of this year, compared with $20 to $40 barrels in the first. It trimmed its 2017 WTI crude price forecast to $57 a barrel from $60.
Oil prices could fall sharply in coming weeks while record US inventories offset production declines in the country, according to Goldman analysts.
“We do not expect growth from OPEC and Russia after the second quarter and expect resilient demand growth. Our confidence that oil reserves will fall in 2016 if prices remain low, is rising,” Goldman analysts said.
Earlier this month, President Vladimir Putin said Russia will freeze this year’s oil output at January’s production level. The decision came as more than 15 oil producing countries expressed their readiness to freeze current output levels.
The plan to freeze oil production was put forward earlier this month by Russia and Saudi Arabia.
READ MORE: ‘Critical mass’ reached to freeze oil output – Russian energy minister
Crude prices are moving upward ahead of the meeting of oil producers which is expected to take place from March 20 to April 1.
Brent was up 1.17 percent, trading at $40.52 per barrel on Friday. WTI jumped almost two percent to $38.47 per barrel.