Goldman Sachs expects the oil market to witness a record surplus of about six million barrels per day by April.


According to Reuters, Goldman indicated the largest-anticipated rise in low-cost production, while the reduced demand caused by the outbreak of the Corona virus is increasingly widespread.


Brent crude is heading towards recording the largest weekly loss since 2008, as oil prices fell this week after Saudi Arabia cut its selling prices in light of a price war with Russia and pledged to pump more supplies to the market, which is already suffering from low demand due to the virus.


Goldman Sachs said in a note dated March 12, the reaction of high-cost producers when we expect that Brent crude will record in the second quarter of 2020 the price of $ 30 a barrel will not be sufficient quickly to dispel the impact of the record large increase in stock that will occur in the coming months. p>


Bank analysts added that a jump in stocks may also force some high-cost producers to stop production, as the logistics of storage may be under pressure.


While all restrictions on production were canceled due to the collapse of the OPEC + agreement, which prompted Riyadh and the UAE to say that they will boost production to record levels, the two major producers also pledged to increase production capacity, indicating a longer-term strategy to extract market share from US companies and other producers. < / p>


The bank estimated demand losses due to the spread of the Corona virus, which is spread at about 4.5 million barrels per day, but pointed to some indications of the improvement in Chinese demand for oil.


He said that the accumulation of oil stocks over the next six months may be similar to the increase that occurred over the 18 months between 2014 and 2016.


On the other hand, the growth in global demand will witness a decrease of about 310,000 barrels per day in 2021, and it will significantly differentiate the impact of any rapid reaction on the level of supply by high-cost producers, in particular, with expectations currently for shale oil production to drop by 900,000 barrels, the bank added. Daily in the first quarter of 2021.


Finally, he said, any potential new escalation of geopolitical tension in the Middle East will not prevent the downward pressure caused by a rapid stockpile buildup unless it leads to a major historical interruption of supplies.