"Insane" Trump Initiatives Cause Crude to Firm, as Goldman Warns of Trouble Ahead

One day after the crude prices declined due to U.S. president Donald Trump hinting that his country and France might be able to reach an agreement with regards to the Iran nuclear deal, oil prices on Thursday rose based on French president Emmanuel Macron stating that he thinks Trump will scrap the deal and impose new sanctions against the Islamic republic anyway.

Meanwhile, those less concerned about minutiae and more about the broader picture said crude is undergoing a complete transformation and an age of restraint, just as earnings are recovering.

Macron's incendiary remarks against Trump one day after he was seen smiling and joking with the U.S. president caused traders to boost West Texas Intermediate by 14 cents to $68.19 per barrel and Brent by 74 cents to $74.74; in addition to Macron predicting that the U.S. will withdraw from the Iran deal in coming weeks (which he admitted was based on nothing more than a gut feeling), he described the reversal of U.S. policy on international agreements - including the Paris climate accord - as "insane."

Still others noted that the U.S. dollar hitting its highest level since mid January did little to damage crude's performance this week: "Oil has had a very good week so far given what the dollar has done," said Bill Baruch, president of Blue Line Futures, adding that "I expect the market to have a good finish for the week given the uncertainty around the Iran deal."

Gene McGillian, manager of market research at Tradition Energy, observed,"The rally seems to be intact and is looking for the next spark to push it higher; that spark could come from reinstituting sanctions.

"But not only is there the possibility of sanctions on Iran, there's also the possibility of Venezuelan and Russian sanctions."

Ironically for a crude market that is said to currently be in a bullish state, analysts are relentlessly gloomy when assessing both near and long term prospects: Michele Della Vigna, the co-head of European equity research at Goldman Sachs, on Thursday dredged up the familiar long-term worry that lack of investment will lead to trouble in the 2020s.

While acknowledging that oil prices are buoyant and earnings appear to be looking up for producers, Della Vigna told CNBC that "Oil is going through a complete transformation, we think it's entering a whole new phase in the investment mega-cycle  what we call the 'age of restraint' as opposed to the 'age of expansion' that we've seen in the first decade of the 2000s."

He went on to remark that the restraint is in the investment sphere, that it would create a gap in production in the years ahead and a "very, very tight market in the 2020s"; he added that consolidation "is absolutely a key component of this stage in the cycle" but did elaborate on where this might happen.

Della Vigna also pointed out that "Everything the sector is investing in now is short-cycle, it's shale, and that never creates true longevity in the production base," and only the big seven oil companies, including Shell, Total, and BP, are investing in long-cycle projects.

Not all experts are incapable of taking satisfaction in the current state of the crude market: earlier this week Gary Dugan, CIO of Namara Wealth Advisors, said there is even opportunity for further upside, and he reiterated the predictions of some pundits who think prices will escalate to about $100 in the next few years.