(MENAFN- ProactiveInvestors)The oversupply on the oil market is not going away and that's despite the earlier hopes of a growth in demand and a stronger economy. The market remains on a downward trend and in early Friday trading; Brent crude was priced lover than US$50 with WTI below US$45 a barrel. There appears to be no end in sight for low prices. Investment banks have been reassessing their annual forecasts to the downside. Goldman Sachs said that global oil oversupply is now around 2 million barrels a day. With WTI below US$45 mid week for the first time since March the market is naturally worried. Goldman Sachs still sees WTI holding around US$45 a barrel warning 'the risks remain substantially skewed to the downside particularly as we enter the shoulder months this autumn.' The bank is not as optimistic as previously and warns in their report this week 'the rebalancing of supply and demand will likely prove to be far more difficult than what was previously priced into the market.' Looking at the American market the Energy Information Agency showed an increase in US inventory with crude stockpiles about 90 million barrels above the 5-year seasonal average. The resilient US oil production is adding to the woes of the market at a time when the global economy remains sluggish and demand from China looks uncertain as the economy wobbles. American oil production rose last week by 52000 barrels a day to reach 9.5 million barrels a day in the current production cycle. Taking this production into account investment bank Julius Bear lowered its forecast for WTI to a range between US$55 and US$60 a barrel for the year with a possibility of going lower. The hope for peace in our time as far as the Iran situation will bring good times to their economy and less than good times to the global oil market. Julius Bear says the ability of the Iranians to release lots of crude should not be undermined. If the Iranian government releases its oil stocks following sanctions being lifted obviously then the bank sees a further decline in the oil price. Saudi Arabia continues quest for market share Saudi Arabia continues to hold firm on its quest to retain market share and the lower oil price is certainly impacting the income in the Kingdom. The country is used to running a surplus but the country's budget deficit could reach 20 percent of GDP this year. Government revenue could fall by US$82 billion according to Capital Economics. The International Monetary Fund says the deficit could last till 2020. The Government is looking to the bond market as a way to raise money by as much as US$27 billion according to some reports. While the lower oil situation is impacting the budget Ali Aissaoui Senior Consultant at APICORP says the situation is not as dire as many may claim and he reiterated a statement issued in March saying that Saudi Arabia can largely afford current fiscal expenditures for up to four years. 'When adding other strings to the budget bow including a large untapped borrowing capacity the country's fiscal power appears almost inexhaustible.' Aissaoui believes the country's policy is the right one though cautions it cannot last forever. 'However the longer oil prices remain depressed the more depleted the liquid buffer will be and the more likely it is that efforts to maintain fiscal sustainability will become extremely complicated.' Many analysts are still calling for OPEC to take action and reduce output but the standoff remains. Market share is important to everyone and as we gear up for the oil conference season in this second half of the year all players will be more cautious and hoping for a new dawn that might reverse their fortunes. The industry has seen a slump in oil prices in the past but now this prolonged period will need more patience better strategy and stronger cooperation.
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