Goldman undaunted by plan to revive oil output

The outlook for oil Sachs Group Inc. A plan by Saudi Arabia and Russia to revive production after over a year of curbs to clear a global glut signals supplies are currently tight, and isn’t a bearish development, analysts including Damien Courvalin wrote in a report. Even if the nations boost output by 1 million barrels a day, that would only offset involuntary production declines, according to the bank.

Goldman has been an oil bull since early last year, saying growing demand and output reductions by the Organisation of Petroleum Exporting Countries (Opec) and its allies will help revive crude from the worst crash in a generation.

Now, as prices retreat after surging to levels last seen in 2014, the bank’s sticking to its optimistic stance and sees the current decline as temporary. Its latest report follows another earlier this month, when it admonished money managers who cut their bullish bets on oil.

“The current level of the market deficit, the robustness of the demand backdrop, and the rising levels of disruptions all set the stage for inventories to fall further,” the analysts wrote in the May 25 report. The proposal for Opec to lift output will require additional increases in production in 2019, which will further reduce already limited spare capacity next year, according to the bank. is still bullish, according to Goldman