OPEC+ deals Goldman Sachs: Not enough to offset the impact of lower oil demand

Goldman Sachs said on Sunday that oil prices would continue to fall in the coming weeks, citing that "historic but insufficient" production cuts reached by major oil producers were unlikely to offset the coronavirus-induced demand plunge
.

The Organization of the Petroleum Exporting Countries (OPEC) and its ally, OPEC+, said they had agreed to cut output by 9.
7 million barrels per day in May and June to prevent oil prices from plummeting
.

The bank sees short-term price expectations for Brent crude around $20 per barrel, but there are downside risks, but expects global benchmarks to outperform U.
S.
crude as OPEC+ exports may fall, freeing up floating storage space
.

Even if core OPEC members fully complied with the cuts, and all other countries that agreed to curb production in May, voluntary cuts would mean a reduction of only 4.
3 million b/d
at first-quarter levels.

Goldman Sachs said larger production cuts by G20 members would not help
.
"Ultimately, this simply reflects that no voluntary cuts are sufficient to offset the 19 million barrels
per day reduction in average demand from April to May due to the coronavirus.
"

Goldman Sachs said a sharp rebound
would be followed by a "sharp market rebalancing" once demand picks up again.

Another Wall Street bank, Morgan Stanley, raised its oil price forecast, saying that while the OPEC+ deal would not prevent large inventory growth in the coming months, it would lead to inventory
reductions starting in the second half of 2020.

Morgan Stanley raised its price forecasts for Brent and West Texas Intermediate (WTI) to $30 and $27.
50 a barrel from $25 and $22.
50 a barrel, respectively
.
It also raised its fourth-quarter outlook for both crude benchmark prices by $5 per barrel, with Brent and WTI raising to $35 and $32.
50, respectively
.

Morgan Stanley expects demand to fall by about 14 million b/d
in the second quarter from a year earlier.