The key to a sustainable recovery in oil prices will be stable declines in non-OPEC production, top commodities bank Goldman Sachs said on Monday.
In its base case scenario, Goldman said it expects a sustained deficit in the third quarter of the year, until which oil prices are seen trading around current levels.
Crude oil futures were trading around $44 a barrel on Monday after the market shrugged off a cut of 1 million barrels per day in Canadian oil production due to a wildfire.
In a separate note to clients, the bank said it sees a decline in U.S. oil production by 650,000 bpd this year.
"Overall, we view U.S. productivity gains and a narrower U.S. decline as indicative of the secular shale productivity trend we see keeping long-term WTI oil prices in the $50-$60 per barrel range."
In its latest short term outlook, the U.S. Energy Information Administration said in April that crude production was set to fall by 830,000 bpd this year, and drop 560,000 bpd to 8.04 million bpd next year.
(Reporting by Apeksha Nair in Bengaluru; Editing by Marguerita Choy)
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Updated Date: May 10, 2016 00:45 AM