OIL: LOWER LONGER
Oil prices will stay lower for longer after more than halving since June, Goldman Sachs' (GS.N) chief commodity analyst said, arguing in his latest research note that demand growth in China and other emerging economies is set to slow.
Goldman's Jeff Currie, who rose to prominence forecasting oil's spike above $100 a barrel last decade, said the rise of U.S. shale output had realigned energy markets, making China a bigger and more important consumer than the United States.
"For the first time since the 1940s, the U.S. is no longer the world's largest (oil) importer," Currie wrote in the note dated Jan. 26, which is part of the bank's 'Top of Mind' research series on macroeconomic trends.
"It has ceded that dubious position to China, which with other emerging markets is now forced to pay up for the last barrel of oil it needs from the rest of the world. As a result, gone are the days of surging EM (emerging market) oil demand."
The bank, which is arguably the most influential in commodity markets, had already slashed its energy forecasts two weeks ago to predict Brent crude LCOc1 may fall below $40 a barrel and average just over $50 this year.
He said in this week's note that the oil crash may be the most "startling and far-reaching market development" since the financial crisis, adding that even if oil prices recover from their recent lows they were unlikely to rebound back to levels at the start of this decade.
Brent hit an all-time high above $147 a barrel in 2008. It averaged around $110 a barrel between 2011 and 2013 as supply disruptions helped mask the impact of the U.S. shale boom.
"A new equilibrium price will ultimately be found, which will likely be much lower than the price over the past decade," Currie wrote.
Brent has fallen from above $115 a barrel in June to a near six-year low of $45.19 on Jan. 16, as the Organization of the Petroleum Exporting Countries as declined to cut output despite the price slide as it focuses on preserving market share. It traded just above $48 a barrel on Tuesday.
On Monday Goldman President Gary Cohn, a former oil trader in the bank's J. Aron commodities arm, told CNBC oil prices could fall to $30 a barrel, about a third below current levels.
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BLOOMBERG - Treasury Secretary Steven Mnuchin told a Texas judge that Exxon Mobil Corp. doesn’t have a right to see privileged documents related to a $2 million fine assessed against the energy company for violating sanctions related to Russia’s 2014 invasion of Ukraine.
NPD - Preliminary production figures for June 2018 show an average daily production of 1 747 000 barrels of oil, NGL and condensate, which is an increase of 88 000 barrels per day compared to May.
NOVATEK - In the first half 2018, NOVATEK’s hydrocarbons production totaled 264.3 million barrels of oil equivalent (boe), including 32.93 billion cubic meters (bcm) of natural gas and 5,864 thousand tons of liquids (gas condensate and crude oil), resulting in an increase in total hydrocarbons production by 6.3 million boe, or by 2.4%, as compared to the first half 2017.
REUTERS - Brent crude futures LCOc1 were down 75 cents, or 1 percent, at $78.11 a barrel by 0308 GMT, having fallen as low as $77.60. U.S. crude CLc1 was down 55 cents, or 0.7 percent, at $73.56.