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EghtesadOnline: OPEC and its allies will probably achieve their goal of draining oversupply from the oil market and boosting prices by next month, says Jeff Currie, global head of commodities research at Goldman Sachs.

The 14-nation producer group and its allies led by Russia set out to balance the market after oil prices plunged more than 40% at the end of last year. To do that, they aim to keep 1.2 million barrels per day off the market in the first six months of the year, CNBC reported.

"OPEC is pursuing a shock and awe strategy" by slashing output at the start of their production-cutting deal, Currie said on Monday. 

He noted that OPEC is throttling back output faster than Goldman expected, while Venezuelan supply continues to tank and Russia says it will accelerate its production cuts, according to Financial Tribune.

"This market is likely to be rebalanced by April," he told CNBC.

That will force OPEC to lay out its plans for lifting the production curbs by May or June, he said. Currie believes that by telegraphing its exit strategy, OPEC can dissuade US drillers from turning on the taps, thereby preventing another price-crushing oil glut.

However, OPEC's "shock and awe" policy, combined with robust oil demand, could easily push Brent crude oil back to $70 to $75 a barrel in the near term, up from current prices in the mid-$60 range, Goldman forecast last week.

Saudi Energy Minister Khalid al-Falih recently told CNBC he is leaning towards extending the six-month deal into the second half of 2019.

 

Opec oil oil market oversupply Goldman Sachs Prices Goal