The recent jump in crude oil prices has yet to convince investors current prices will be sustainable, analysts at Goldman Sachs said Monday.
Oil prices have jumped almost 50% since the middle of 2017, but investors were said to be unsure over a number of factors seen pushing prices. U.S. producer discipline, healthy global demand and supply disruptions were all viewed with a sense of caution among investors, according to the investment bank, CNBC reported.
“Most importantly, investors remain unconvinced U.S. producer discipline will hold,” Goldman analysts said, in a research note.
“That supply growth needs to be constrained voluntarily, even in the face of a more constructive demand outlook (that) still leaves investors more focused on other metals and mining, where there is greater confidence in China policy-driven supply constraints,” it added.
Oil prices were split Monday, with Brent crude ending the trading day at $62.59 a barrel, down 0.32%, while U.S. West Texas Intermediate crude ended the day at $59.29/Bbl, up 0.15%, Kallanish Energy calculates.
OPEC said Monday it expects demand for oil to grow faster than it originally expected in 2018, but the cartel also sees supplies from beyond the producer group surging this year, driven by rising U.S. output.
Goldman said it “continued to have an above-consensus outlook for global oil demand.”
Late last year, Goldman lifted its Brent price forecast for 2018 to $62/Bbl and its WTI projection to $57.50/Bbl. The revisions were up from $58 a barrel and $55 a barrel, respectively.