Goldman expects oil prices to reach $90 by year’s end as supply builds
Brent futures rose to nearly three-year highs last week as global production disruptions forced energy companies to pull large quantities of crude oil out of inventory.
Oil prices were trading at $79.19 a barrel as of 0619 GMT on Monday, while US West Texas Intermediate (WTI) crude was at $75.08 a barrel.
“While we have long held a bullish oil outlook, the current global supply-demand deficit is larger than we expected, the recovery in global demand from the delta effect is even faster than our above-agreed forecast and global supply is lower than we expected. … well below the consensus forecast,” Goldman said in a note dated Sept. 26.
Earlier this month, the Organization of the Petroleum Exporting Countries and Allies, a grouping known as OPEC+, agreed to stick to its decision made in July to phase out record production cuts.
Goldman said while the impact on Hurricane Ida’s supply has been greater than OPEC+’s production ramp-up since July, non-OPEC+ and non-shale production has been disappointing.
Hurricanes Ida and Nicolas, which swept into the US Gulf of Mexico earlier this month, damaged platforms, pipelines and processing centers, shutting most offshore production for weeks.
On the demand side, Goldman said winter risks were skewed “quadruple” upward, as global gas shortages would increase oil-fired power generation.
However, Goldman flagged a possible new virus variant that could weigh on demand and an aggressively sharp ramp-up in OPEC+ production that could soften its projected losses, leading to its bullish outlook. as risk.
For 2022, the Bank lowered its average forecasts for the second and fourth quarters from $85/bbl to $80/bbl, based on the prospect of an Iran-US nuclear deal by next April.
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