OPEC's oil production cuts are having unintended consequences - Goldman Sachs

Michelle Della Vigda, co-head of European Equity Research ad Goldman Sachs, notes that within one month of the OPEC announcement, the contango declined to US$1.1/bl (2%), achieving the cartel’s purpose, and further adds that the unintended consequence was to underwrite shale activity through a bullish credit market at a time when delayed delivery of the 2011-13 capex boom could lead to record non-OPEC production growth in 2018, according to a article published on the Business Insider UK.

More quotes:

• The inventory build pushed the 2-year forward price of Brent crude, the international benchmark, $5.50 per barrel (or 11%) above the spot price
• As OPEC countries sell spot, but US E&Ps [exploration and production companies] sell 50%+ of their production forward, this was giving the E&Ps a competitive advantage