Oil dropped as much as 40 percent during the fourth quarter of 2018, but Saudi Arabia pared back its production near the end of the year. Additionally, supply disruptions came about after the Trump administration blocked oil shipments to and from Venezuela as the country faces tenuous political stability.
In December, lengthy Organization of the Petroleum Exporting Countries (OPEC) discussions finally came to a conclusion, resulting in a larger-than-expected production cut. OPEC and associated partners agreed to cut 1.2 million barrels per day with OPEC being responsible for 800,000 barrels.
According to global investment firm Goldman Sachs, more bullishness could be ahead for oil prices in the near-term before an eventual ceiling spurred by a “New Oil Order” puts a cap on price spikes.
“While prices could easily trade in a $70-$75/bbl trading range, we believe such an environment would likely prove ﬂeeting,” according to Goldman’s global head of commodities research Jeffrey Currie and senior commodity strategist Damien Courvalin. “As a result, we would view near-term strength as a window of opportunity for producers to sell forward prices to create earnings security before the return of the New Oil Order later this year.”
In the video below, Jeff Currie, global head of commodities research at Goldman Sachs, joins CNBC’s “Closing Bell” to break down the crude oil rally.
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