Crude oil prices fell by more than 1% this morning. On Monday, Brent was already down by 2.5% to $49.59, while WTI was off 2.1% from the previous $47.9.
According to media sources, Goldman Sachs has sent out a warning that the rebound in prices had been merely caused by the news on the potential output freeze and the weakening dollar.
Crude Oil Prices Start Downward Trend
Analysts are saying that the downfall in prices has been a result of an overreacting market and not caused by changes in oil fundamentals.
According to Goldman Sachs, the potential proposal by OPEC members and non-OPEC producers to cut down on oil production would result in record highs.
As a result, it would not be expected to bring more balance to supply and demand levels.
As well as this, the deal is actually not that likely, the bank adds, as previous disputes between Saudi Arabia and Iran are bringing some uncertainty regarding Russia’s actual willingness to cooperate with OPEC members.
Crude Oil Prices React to Market Uncertainty
Crude oil prices had gone up by more than 20% in the beginning of August until last week, when they started a downfall by more than 3.5%.
The beginning of the month marked the time when prices crossed the $50 per barrel threshold, an increase of more than $10 since the beginning of August.
At the time, this reaction was blamed on Saudi Arabia’s oil minister Khalid al-Falih’s comments that OPEC may act on oil production at its next meeting.
However, a freeze proposal had been on the table earlier this year but efforts fell through due to differences between the members and non-members about market share.