The recent rebound in oil prices is fragile, Goldman Sachs says in a report released today.
Fuelfix.com reports the bank says that crude production in Canada and Nigeria has fallen off, but beyond the disruptions that have pushed oil prices up in recent weeks, the market still hasn’t worked through much of its surplus.
OPEC is putting out more oil than expected and climbing energy prices could spur a supply response by the U.S. and other producers, which could put pressure on the market.
Though U.S. crude stockpiles are declining, it may not mean crude supplies are shrinking enough to meet current demand.
“We believe that this shift in visible stocks reflects the strong pull from China over the past few months and not a tighter market,” Goldman analysts wrote.
China has been importing more crude after its demand fell this year. Goldman says it expects that commercial inventories will “start to reflect our view that the global market is not yet in deficit.”
