It may be time for OPEC and U.S. shale producers to pump the brakes.
Despite a large weekly drop in crude inventories, banks continue to mark down oil prices. Barring a sharp cut by OPEC or a visible slowdown of U.S. shale activity, oil prices are likely to continue to fall.
Goldman Sachs analysts said in a July 10 report that oil prices could dip below $40 per barrel (bbl) as the “market tests OPEC’s and shale’s reaction.”
Prices aren’t expected to be driven by storage concerns but “the ongoing search for a new equilibrium,” the report by Goldman’s Damien Courvalin said.