Oil experts said in interviews published by Goldman Sachs that oil prices may continue to decline until they may reach the single digit (less than $ 10) due to declining demand in light of the Corona virus crisis, which is exacerbated by a struggle for market shares between two of the major producers while The world’s storage capacity is running out.
But the bank said in a note on March 31 that the downturn could open the way to a “more robust global industry”, with a recovery in light of reduced production.
Oil expert and Pulitzer Prize-winning writer Daniel Yergin told Goldman Sachs that demand could drop 20 million barrels per day in April, or even more, citing “the biggest decline in demand in the modern era”, while Saudi Arabia and Russia are locked in a price war.
He continued, “If we run out of oil storage capabilities and it is not possible to transfer oil, as happened in 1988, we will witness a sharp decline in prices to very low numbers in the dozens, and in some cases to the ones on the ones.”
He added that low prices may prevail over the next several months or even longer.
Oil prices are currently moving in a range between $ 20 and $ 29 after falling in March after the collapse of an agreement to curb supplies between the Organization of Petroleum Exporting Countries (OPEC), Russia and other producers, in the context of what is known as OPEC Plus.
Gary Ross, founder of the Bayerah Energy Group, said the time it takes to get rid of the current surplus and how long prices remain low depends more on the developments of the Coruna virus epidemic.
“If efforts to control the epidemic are successful in the next three to four months, and we start to see a recovery in the summer, then we may see a significant increase in demand growth in 2021,” Ross added.
But Jeff Corrie, head of global commodities research at Goldman, reiterated the bank’s view that Brent will likely remain near $ 20 a barrel because it is easier for crude producers to store in water than standard U.S. WTI producers, who will face severe price pressure.