Citi Tells Investors to Stop Worrying and Learn to Love Oil

16 Mar 2017   Oil Supply, Prices

Buy oil now, and count on Saudi Arabia for support, according to Citigroup Inc.  OPEC’s output cuts aimed at easing a global glut are “real” and is cleaning up the market, analysts including Seth Kleinman wrote in a report dated March 14. While prices have dropped recently amid rising U.S. inventories and drilling activity, investors should take advantage of the slide because the Saudis are likely to defend prices this year, according to the bank.  The bank’s comments are similar to Goldman Sachs Group Inc., which called for investors to be patient and said they should go, or stay, long on oil. Prices last week fell below $50 for the first time since December on concern rising U.S. output will offset curbs by the Organization of Petroleum Exporting Countries and other producers. While Saudi Arabia told OPEC it dialed back on some of its cuts last month, the extra supplies were moved into storage and the kingdom said it remains determined to stabilize the market.

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