Crude oil prices lifted today despite coming under pressure as a number of banks slashed their price forecasts.
Global benchmark Brent crude dropped more than one per cent before recovering to trade 1.73 per cent higher at $47.69 per barrel. West Texas Intermediate (WTI) prices were 1.87 per cent up at $45.23 per barrel.
Prices were bolstered after Qatar said it will stick with the Organisation of the Petroleum Exporting Countries' (Opec) deal to reduce production by 1.8m barrels per day (bpd) until March 2018.
However, Goldman Sachs said Opec needs to "shock and awe" the industry in order to continue lifting prices.
Opec production and exports increased in June, driven by ramped up output in Libya and Nigeria, which Opec has yet to address. But the cartel has an opportunity to increase cuts at its next compliance committee meeting on 24 July, Goldman said.
"There has been some talk about Nigeria and Libya having to fall in line with the rest of Opec members, but right now those counties want to take care of their own needs first," said David Madden, market analyst at CMC Markets.
The industry needs to see sustained inventory draws and US rig count declines or evidence of further Opec cuts for prices to rally, and Goldman said a failure to do so means WTI oil prices could fall below $40 per barrel.
BNP Paribas told Reuters the "fundamental mood" of the sector has taken a turn for the worse. The French bank cut its forecasts for Brent by $9 to $51 a barrel for 2017 and by $15 to $48 for 2018.
Barclays also cut its expectations for the next two years, reducing Brent forecasts to $52 a barrel for both years from a previous level of $55 for 2017 and $57 for 2018.
Crude prices are stuck around 18 per cent below their starting point for 2017.
"The markets have been shifting their focus back onto oil today, amid a threat of further downside for the already depressed commodity. Goldman Sachs have proclaimed that we could see sub-$40 crude if Opec do not act with both strength and surprise. However, the fact is that with Trump in charge, a lower taxation environment coupled with recently reduced costs could mean that low oil prices are the norm given sky-high US production," said Josh Mahony, market analyst at IG.