Commodities
Goldman Sachs predicts Brent price will rise to $100 by December
Analysts at Goldman Sachs have revised their forecast for Brent – they now expect Brent prices to rise to $100 by December, not mid-year. The forecast for the average price of oil this year has been lowered to $92 from the previously expected $98.
U.S. investment bank Goldman Sachs has revised its forecast for the price of Brent oil – it now expects it to reach $100 per barrel by December 2023, rather than mid-year, reports Bloomberg. On average, Brent will cost $92 a barrel in 2023, rather than the $98 they previously expected, according to the bank’s analysts’ forecast.
“This revision reflects a moderate softening of our forecast for 2023,” Goldman Sachs’ analyst team said in a note.
Brent crude price rise – reasons
Goldman Sachs experts believe China’s economic recovery due to softening COVID-19 policies will lead to shortages in oil markets by June this year and “reveal structural underinvestment” in the industry. Also, OPECcountries are likely to increase production in the second half of 2023 to balance supply and demand, analysts added.
Back in January, Goldman Sachs allowed the Brent price to rise to $110 by the third quarter of 2023 if China’s coronavirus restrictions were fully lifted. Beijing began to wind down a policy of zero tolerance for COVID-19 in early December after mass protests.
UBS analysts, in turn, predicted the growth of Brent to $110 a barrel in the second half of 2023. According to them, the energy problems of 2022 (for example, the redirection of Russian supplies and the chronic underinvestment in the oil industry) will be relevant this year, but unlike last year, when most coal prices rose, in 2023 it will be oil.
The optimistic forecast by Goldman Sachs contradicts the expectations of experts at Citigroup, writes Bloomberg. Analysts of the latter believe that the market is well supplied and the cost of Brent is likely to fall by another $10 per barrel by the end of 2023. As of 16:58 Moscow time on February 10, Brent cost $85.73 per barrel, adding 1.46%. Oil is rising in price on Friday amid news that Russia will cut production by 500,000 bpd in March, Reuters writes.
Earlier we reported that the founder of Andurand Capital predicted oil at $140 per barrel.
By Enes Tunagur
(Reuters) -Oil prices fell on Friday as analysts continued to forecast a supply surplus in 2025 despite the OPEC+ decision to postpone planned supply increases and extend deep output cuts to the end of 2026.
futures were down 66 cents, or 0.9%, to $71.43 per barrel at 1128 GMT. U.S. West Texas Intermediate crude futures were down 65 cents, or 1%, to $67.65 per barrel.
For the week, Brent was on track to fall 2%, while WTI was on course for a 0.5% drop.
The Organization of the Petroleum Exporting Countries and its allies on Thursday pushed back the start of oil output rises by three months until April and extended the full unwinding of cuts by a year until the end of 2026.
The group, known as OPEC+ and responsible for about half of the world’s oil output, was planning to start unwinding cuts from October 2024, but a slowdown in global demand – especially in China – and rising output elsewhere have forced it to postpone the plan several times.
“The outcome of the latest meeting of OPEC+ members surprised us positively … The extension of the production cuts shows the group remains united and is still targeting to keep the oil market in balance,” UBS analyst Giovanni Staunovo said.
Pressuring prices on Friday, analysts reiterated expectations of a supply surplus next year, although some of them now view a smaller surplus than before.
Bank of America forecasts increasing oil surpluses to drive Brent to average $65 a barrel in 2025, while expecting oil demand growth to rebound to 1 million barrels per day (bpd) next year, the bank said in a note on Friday.
HSBC, meanwhile, now expects a smaller oil market surplus of 0.2 million bpd, from 0.5 million bpd previously, it said in a note.
Brent has largely stayed in a tight range of $70-75 per barrel in the past month, as investors weighed weak demand signals in China and heightened geopolitical risk in the Middle East.
“The general narrative is that the market is stuck in its rather narrow range. While immediate developments might push it out of this range on the upside briefly, the medium-term view remains rather pessimistic,” PVM analyst Tamas Varga said.
By Paul Carsten
LONDON (Reuters) -Oil prices pared some gains on Thursday after a source told Reuters OPEC+ has agreed to delay a planned oil output hike until April 2025.
was up 24 cents, or 0.3%, to $72.55 a barrel at 1237 GMT. It had been at $72.84 before Reuters reported the delay.
U.S. West Texas Intermediate (WTI) rose 25 cents, 0.4%, and was trading at $68.79 a barrel.
The planned delay comes as OPEC+, made up the Organization of the Petroleum Exporting Countries plus allies including Russia, tries to support prices as it wrestles with weak demand, notably from China, and rising supply outside the producer group.
“It will not make next year’s oil balance tight and supply surplus is still anticipated,” said Tamas Varga of oil broker PVM. “This view was mirrored in the gut price reaction.”
There remains the question of how long the delays could last, with this only the latest in a series. OPEC+ was originally due to begin raising output in October as part of a plan to gradually unwind the group’s most recent layer of output curbs of 2.2 million barrels per day.
“They reiterate that these barrels will indeed come back,” said Bjarne Schieldrop, chief commodities analyst at SEB. “It’s a limited time frame. This means there is no upside to the oil price in the next couple of years.”
Elsewhere, a larger-than-expected draw in stockpiles last week also provided some support to prices.
In the Middle East, Israel said on Tuesday it would return to war with Hezbollah if their truce collapses and its attacks would go deeper into Lebanon and target the state itself.
Meanwhile, Donald Trump’s Middle East envoy has travelled to Qatar and Israel to kick-start the U.S. President-elect’s diplomatic push to help reach a Gaza ceasefire and hostage release deal before he takes office on Jan. 20, a source briefed on the talks told Reuters.
On Thursday, OPEC+ is expected to postpone its planned increase in oil production, which was initially scheduled to commence in January, Reuters reported.
The decision to maintain current output levels aims to provide additional support for the oil market. The group, responsible for about half of the world’s oil supply, had intended to start easing output restrictions through 2025 but is now reconsidering in light of a global demand slowdown and increased production from non-member countries.
The consortium’s plan to unwind output cuts has faced challenges due to these market conditions, which have also exerted downward pressure on oil prices.
Accordingly, an extension of the current output cuts for an additional three months is the most probable outcome of the online meeting. However, there are indications that an even longer extension could be under consideration.
The deliberations within OPEC+ reflect the group’s ongoing efforts to balance oil supply with fluctuating global demand. The decision to delay the increase in output is seen as a measure to stabilize the market, which has been affected by various economic factors.
Market participants are closely monitoring the developments from OPEC+’s meeting, as the group’s decisions have significant implications for global oil supply and pricing. The final outcome of the meeting, including the length of the extension, will be determined by the consensus of the member countries.
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