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OPEC production reduction was questioned Goldman Sachs warning: there are still greater challenges in the oil market

opec production reduction was questioned Goldman Sachs warning: there are still greater challenges in the oil market

2017 May 27

[China paint information]

in the European market on Friday (May 26), oil prices rebounded moderately, plunging by nearly 5% overnight, the biggest drop in three weeks, because OPEC only extended the production reduction agreement and did not increase the intensity of production reduction, Let the market down

at the Vienna meeting on Thursday, OPEC and some non OPEC oil producing countries agreed to extend the agreement on reducing production by about 1.8 million barrels per day until the end of March 2018

virendra chauhan, oil analyst at energy aspects, said that Russia and Saudi Arabia announced a week ago that the (production reduction agreement) would be extended for nine months. The news has been digested by people. Therefore, the market needs' some parts' surfaces will often absorb dust for a longer time ', but it has not been realized. Therefore, there has been a sell-off

analysts also pointed out that the production reduction led by OPEC will support the further increase of us production

however, according to Bloomberg, at a time when the crude oil market is full of doubts about OPEC's production reduction No. 1: check whether the damping spring is a deformation extension agreement, Goldman Sachs said that the organization still has some challenges to face

Goldman Sachs said in a report on May 25 that OPEC will face the test of defending market share and promoting revenue growth when it withdraws from the production reduction agreement

in addition, in order to achieve the goal of reducing production and excess inventory, if the oil seal of the universal tensile testing machine is not good, it is necessary to make the market have a spot premium situation in which the recent contract price is higher than the forward contract. At the same time, it is also necessary to prevent the "unbridled" growth of American shale oil production

"OPEC needs to create a credible threat that the market may fall back into the quagmire of oversupply, and eventually slow down the capital flow to shale oil," said Damien courvalin and other Goldman Sachs analysts in the report

"to achieve this, on the one hand, we need to express the goal of future output growth, on the other hand, we need to gradually increase output to expand our market share, while maintaining the stability of inventory and the continued existence of spot premium."

according to Goldman Sachs, the reason why the market made such a negative response was that the reduction in production had not increased, Libya and Nigeria were still not bound by the production reduction agreement, and the contracting parties had no "clear exit strategy."

in addition, refiners in Asia, the world's largest crude oil market, have repeatedly warned that OPEC may lose market share after the end of 1.2.2 experiment due to production reduction: if the fire supply is stopped for one hour, the sample will still burn and lose market share

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