*Osama Suleiman from Vienna
Goldman Sachs has maintained its positive outlook for crude oil prices in the remaining months of this year, despite the continuing and worsening trade dispute between the United States and China.
It pointed to the expectation that the WTI price will remain at an average of $ 70 a barrel this year.
The report pointed out that despite the series of weekly losses of West Texas Intermediate crude oil linked clearly to the escalation between the United States and China, the Bank believes that global economic growth will support the rise in average prices for this year.
It also emphasized that the fundamentals of the oil market were good and promising. It pointed out that China has not yet to impose import tariffs on the US crude, which some saw as a way to keep the card on the table for future use.
It added, "this is the only logical step in the current circumstances."
The report said that relations are complex in the oil market and that the stability of the market is a shared responsibility of all parties and that "we must study the interrelationships in the market, especially that many producers are consumers at the same time."
It noted that the process of transition to alternative energy sources is relatively slow.
According to Goldman Sachs, "In the light of the recent trade dispute between the US and China, we find that China is hardly the most replaceable importer of oil with any other source of energy resources. Though, the situation is different in the US given the amount of crude oil you need, as the US producers are likely to find it difficult to find new markets quickly for more than half a million barrels per day that sold to China according to data last June."
It added, "In the light of the sanctions imposed on Iran, the challenge may be significant in the market over the next few months to secure a good and stable level of oil supplies that to meet all the needs of consumers."
The report quoted international analysts as seeing that market challenges will expand in light of strong demand growth expectations. This is likely to result in a lack of supply due to the decline in global stocks, due to the fact that producers, led by Saudi Arabia, Russia and the rest of OPEC members and abroad, prefer not to rush to increase supply too quickly to avoid oversupply.
At the same time, the report said that there was a severe crisis in the level of oil production in Canada due to inadequate capacity of pipelines, which led to negative results on the sector as it has been a decline in oil and gas prices in Canada this week by 14 points. This is bringing the total number of Canadian oil and gas platforms to 209, which is less than 11 stations compared to this time last year.It also pointed to the loss of 12 crude oil pumps and the loss of large production capacity in the gas field.
Furthermore, the International Energy Agency said the current easing of short-term concerns about oil supplies may be only temporary, because the return of US sanctions on Iran - possibly coupled with production problems elsewhere - could make the global crude oil supply situation "extremely difficult."
The Energy Agency reported that the recent slowdown in the market came because of the easing of tensions in the short term and the decline in prices is currently the result of reduced demand growth, but this will not last long.
It pointed to the great impact of the return of US sanctions on Iranian oil exports and the stability of the market and secures the level of supplies of crude oil.
The International Energy Agency report said the administration was looking to reduce Iranian oil exports to a zero level and was trying to persuade as many Tehran oil customers as possible to cut supplies from Iran.
At the same time, analysts expect that all countries will not respond to US decisions, including countries in Europe along with China, which has already refused to recognize the US sanctions imposed on Iran; "It will not stop buying Iranian crude oil," it said.
The report pointed out that with the entry of oil sanctions against Iran to take effect and at the same time the problems of production in other places is maintaining the global supply of crude oil that may be very difficult and will come at the expense of maintaining adequate reserve capacity. So the market outlook may be much quieter at this stage than it is today.
The report stressed the continuing state of the crisis of the production of Canadian oil in the shadow of falling prices.
It pointed to the Agency's forecast to increase growth in demand for oil in 2019, which will register a slight increase for the next year by 110 thousand barrels per day to reach 1.5 million barrels per day.
It emphasized that there are expectations of a wider risk as trade disputes escalate and prices rise if the offer is restricted.
The increased risk of shrinking supply and market stability later this year could lead to a significant rise in the price level and thus affect demand growth.
It explained that other factors that must be taken into account are trade tensions that may escalate and lead to slower economic growth, and therefore lower demand for oil.
On the other hand, oil prices rose more than 1% at the end of last week on the expectation that US sanctions on Iran that is expected to reduce supplies. But, crude ended the week on a loss as investors worried that global trade disputes could slow economic growth and hurt energy demand.
According to Reuters, the global benchmark Brent crude ended the trading session higher 74 cents, or 1.03 percent, to settle at $ 72.96 a barrel. The US benchmark WTI futures rose 82 cents, or 1.23 percent, to settle at $ 67.63 a barrel. A sell-off in Wednesday's session ended the week's two record losses with Brent down 0.5 percent and US crude at 1.2 percent.
"Morale is trapped between fears that a China-US trade dispute will hurt demand for oil and an impending supply shortage in Iran," said Steven Brannock, an analyst at London-based brokerage at BPM Oil Associate.
Rising trade disputes overshadow the outlook for economic growth and push the dollar, as the global currency of the world rise, which is increasing the cost of crude for consumers from other currency holders.
The number of active oil rigs in the United States registered the biggest weekly increase since May as energy companies continue to implement plans in order to increase exploration and production spending in anticipation of higher crude prices in 2018 over the past few years.
Baker Hughes Energy Services, in its closely monitored weekly report, said, "Drilling companies added 10 oil excavators in the week ending Aug. 10 to a total of 869 diggers, the highest level since March 2015."
The increase in the number of rigs came despite the US crude prices fell for a sixth week in a row for the first time since August 2015, due to the fueled by concern that trade tensions between the United States and China could hurt oil demand.
The number of active oil rigs in the US, a preliminary indicator of future production, is higher than a year ago when it reached 768 as oil companies increased production and expected prices in 2018 would be higher than in previous years.
The average price of US crude oil contracts since the beginning of the year is $ 66.28 per barrel, compared with an average of $ 50.85 last year and $ 43.47 in 2016.
