Goldman Sachs downgraded its oil price forecast for 2023. At the beginning of next year there could be a surplus supply, which will reduce the risk of price spikes in the winter, it seems, in the bank.

Crude Oil price analysis forecast – up-to-date information

Goldman has lowered its outlook for Brent prices in the first and second quarters of 2023 to $90 and $95 a barrel, respectively, from $115 and $105.

Risks of price spikes have diminished this winter as demand in China has been lower than previously expected; crude oil exports from Russia remain near levels seen before the conflict in Ukraine, and supply problems in Kazakhstan and Nigeria have eased.

The bank expects the oil market to have a surplus of 1.6 million barrels per day by the end of the current quarter. In the 1st quarter of next year the surplus may reach 1.3 million barrels per day due to the seasonal reduction in demand.

At the same time, global demand in 2023 may increase by 2 million barrels per day on the back of the opening of the Chinese economy and the recovery of international transportation.

The average price of Brent crude oil in 2023 could be $98 a barrel and the average price of WTI crude oil could be $92 a barrel, the bank believes. A previous forecast suggested that average prices for Brent and WTI next year would reach $110 and $105 a barrel, respectively.

In the last two quarters of next year, Brent prices could rise to $100 to $105 a barrel, lower than the previous estimate, which assumed prices around $110 a barrel.

Goldman predicts that Brent crude will average $105 a barrel in 2024 and WTI crude will average $99 a barrel.

Brent crude oil prices have fallen nearly 6% in the past quarter. Quotes have fallen more than 40 percent from a peak of $139 a barrel reached in March.

“Despite the recent price declines, commodities may deliver the best returns among all asset classes in 2022,” Goldman Sachs stressed. The bank expects the S&P GSCI TR Index, which tracks the performance of commodity prices, could rise 23% over 2022, and could jump 43% in 2023.

Earlier we reported that Oil prices declined after restart of part of the Keystone pipeline.