Goldman expects oil prices to hit $90 by year-end
Goldman Sachs raised its forecast for the year-end Brent crude oil prices to $90/barrel from $80, as a faster fuel demand recovery from Delta variant and Hurricane Ida’s hit to production led to tight global supplies, Arab Newsreported.
Brent futures hit a near three-year high last week, as the global output disruptions forced the energy companies to pull large amounts of crude out of inventories.
Oil prices were trading at $79.19/barrel, earlier on Monday, while the US West Texas Intermediate (WTI) crude was at $75.08/barrel.
“While, we have long held a bullish oil view, the current global supply-demand deficit is larger than we expected, with the recovery in [the] global demand from the Delta impact even faster than our above-consensus forecast and with [the] global supply remaining short of our below consensus forecasts,” Goldman said in a note dated September 26.
Earlier this month, the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, agreed to stick to its decision made in July to phase out record output cuts.
Hurricane Ida’s hit to supply has more than offset OPEC+’s production ramp-up since July with non-OPEC+ and non-shale production continuing to disappoint, Goldman said.
Hurricane Ida and Nicholas, which swept through the US Gulf of Mexico earlier this month, damaged platforms, pipelines and processing hubs, shutting most offshore production for weeks.
Goldman; however, flagged a potential new virus variant, which could weigh on the demand and an aggressively faster ramp-up in OPEC+ production that may soften its projected deficit, as key risks to its bullish outlook.
For 2022, the bank lowered its average forecasts for the second and fourth quarters to $80/bbl from $85/bbl, as it factored in the possibility of an Iran-US nuclear deal by next April.
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