LONDON - Saudi Arabia’s voluntary oil production cut is expected to bring the oil market into deficit for most of 2021 even as new lockdowns to contain the spread of the coronavirus batter oil demand, analysts say.
Saudi Arabia, the world’s biggest oil exporter, surprised the market on Jan. 5 with a voluntary output cuts of 1 million barrels per day in February and March. With coronavirus infections spreading rapidly, producers are wary of a new blows to oil demand which could lead to rising inventories. News of the cut boosted oil prices to an 11-month high, with backwardation, when prompt prices trade at a premium to future prices, widened, which could encourage traders to take oil out of storage.In its most recent research, Goldman Sachs revised down its demand forecasts for January, February and March by 1-2 million bpd each month.
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