Goldman Sachs Slashes Oil Price Outlook Amid OPEC Turmoil (USO)

Brent daily chart

"It is thus doubtful whether (the) price rise will really prove lasting", analysts at Commerzbank wrote.

Taking Dubai oil as a benchmark, prices so far in 2017 are 25 percent above last year's $41 average, while OPEC production in the same time is 2 percent, or 700,000 bpd, below 2016's average, he said.

OPEC and non-OPEC technical committee on production enforcement was said to have examined the scenario including Nigeria and Libya's exempt in the production cuts.

Experts also believe that there is a clear risk that inventory normalization will not take place until the end of March next year when the OPEC cut will come into force. According to the US Department of Energy, Venezuela is the third-largest supplier of imported crude oil and petroleum products to the United States, though USA imports from Venezuela have been on an overall decline in recent years. "We view this market structure as a "terminal stylized oil forward", the study said. The bank said it failed to appreciate the rate of growth of U.S. shale production and the pace of investment to follow.

The information could become a good driver of oil prices as it proves Russia's compliance with a global oil cut deal, but the influence of other factors can offset the market's optimism caused by the Russian export news.

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While prices have surged this week, oil in NY and London are still set for a loss in June - a month in which prices typically gain. Societe Generale SA has also slashed its crude forecasts.

The Kingdom has been the U.S.'s foremost oil supplier, among OPEC nations, in 23 of the past 31 years.

Last week saw U.S. President Donald Trump highlight the nation's energy sector, oil and natural gas in particular. The ouster and killing that year of former leader Moammar Al Qaddafi led to a collapse in central authority, and many foreign investors withdrew as armed groups fought for control of oil facilities. Only 17 of the 90 companies in the index have seen gains in their share prices in the second quarter, so it comes as no surprise that energy is the worst performer in the MSCI World Index. The price has risen every day since June 21, when a new year low of $42.53 was recorded. Nevertheless, their health hinges very heavily on the trajectory of oil prices, which, for now, doesn't look very encouraging. Prices have fallen 10% in last three months due to bearish drivers.

But others are hoping that the recent selloff had gone too far and that the gains are here to stay.

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