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Goldman: OPEC Shouldn't Extend Production Deal -- Market Talk

27 Mar 2017 4:31 am

0431 GMT - It would be counterproductive for OPEC to extend the production-cutback deal into 2H because the market is already rebalancing, says Goldman Sachs. It contends that reductions which have already occurred, combined with strong demand, are enough to offset the recent rebound in US output. It also sees the drawdown in developed economies' commercial inventories being further accelerated. "We believe it is beneficial for low-cost producers to accelerate the normalization of oil inventories" and at the same time not target a sharp price rebound. Goldman says at $65/barrel, more global drilling would be prompted. It adds an extension of the output-cut deal should only be made if rising production from Nigeria and Libya presents serious upside risks to supply and long-term prices decline further. (jenny.hsu@wsj.com; @jen1113)

(END) Dow Jones Newswires

March 27, 2017 00:31 ET (04:31 GMT)

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