Oil: OPEC production cuts to turn into solid oil inventory draws? – Goldman Sachs

Analysts at Goldman Sachs believe that it is just a matter of time before the OPEC production cuts to turn into solid oil inventory draws.

Key Quotes

“Since before the OPEC cut, we have argued: (1) that OPEC’s incentives have been to normalize OECD inventories through a short-term, tactical cut; (2) that oil draws were not expected to materialize until 2017Q2, with the US being the last place to see inventories draw. We continue to believe in this analysis, and have subsequently argued that the oil market is indeed making progress on rebalancing, despite the record highs in US crude inventories over 2017Q1.”

“We continue to expect sharp inventory draws in 2017Q2, and see March weekly US oil data as supportive of this view, with a seasonally-adjusted deficit (thanks to strong weather-adjusted oil demand growth), and imports from the Middle East finally declining with the lagged effects of the late 2016 supply push now ending.”