Drop in U.S. rig count won’t do the trick, say analysts Getty ImagesThe rig count needs to come down even further to stabilize the oil price, Goldman Sachs says in a new report(MarketWatch) — Thrilled about the recent bounce-back in oil prices? Well, it’s too early to get excited about the seven-week high reached on Monday, according to Goldman Sachs analysts, who predict we still have months of low oil prices ahead of us. While noting that a decline in U.S. rig count has been faster than expected, that reduction is still not enough to change the course of the oil market, they said in a report dated Monday. “It remains insufficient in our view to balance the U.S. market in 2016,” they said. “Prices need to stay low for longer to achieve a sufficient and sustainable slowdown in U.S. production growth.” Goldman Sachs has forecast that crude oil will trade around $40 a barrel over the next three months, although it has noted there is “modest upside” to that prediction — that is, there’s a risk prices could be higher. In early March, the investment bank argued its bearish outlook might be too pessimistic, but despite that concern, it hasn’t since made any change to its price forecast. For the first half of 2016, its analysts see prices improving to $65 a barrel. Compare that with the current price of oil for May delivery CLK5, -2.37% — it dropped 70 cents to $51.45 on Tuesday. Crude-oil prices started a sharp descent last summer as concerns built about slowing global demand and a supply glut. An increase in U.S. shale production in particular is seen as a factor in global oversupply — but that hasn’t prompted the pullback in U.S. output you’d expect. Not yet, anyway: Goldman Sachs analysts predict total oil production and stockpiles in the U.S. could reach a peak within weeks. “While the build in U.S. crude inventories has been unprecedented, our rig-based modeling of near-term U.S. production points to production nearing a peak. Combined with an expected ramp-up in refinery runs, we expect U.S. crude oil inventories to peak in April,” they said. Data showed last week that commercial crude-oil inventories rose 4.8 million barrels in the week ended March 27 to 471.4 million, the highest level in around eight decades. But the U.S. Energy Information Administration data also showed a 36,000 barrel-a-day drop in production to 9.386 million barrels, which could be the first sign of stabilization in the oil market, the Goldman Sachs analysts said. However, the still-too-high rig count, coupled with increased productivity and the return of uncompleted wells, could hamper the rebalancing process, they noted. “We expect that U.S. production growth will remain too high in [the second half of 2015] and 2016 at the current rig count and as a result of the constraint of the export ban,” the analysts said.