Current Goldman Sachs oil price forecast 2022: Analysts (NYSE:GS) believe another drop in Brent prices has been driven by low liquidity and growing multiple concerns, including the recession, China’s “zero tolerance” coronavirus policy and the country’s real estate sector, the release of strategic reserves in the US and Russia’s production recovery.

“We believe the possibility of higher oil prices remains high, even given all these negative factors, as the market is in a state of greater deficit than we have expected in recent months,” experts said.

Nevertheless, they worsened their forecasts for oil prices in the 3rd and 4th quarters of 2022 – to $110 and $125 per barrel, respectively, from $140 and $130 per barrel. The forecast for 2023 remained unchanged at $125/bbl.

The previous week the price of Brent had fallen by almost 9%; WTI had fallen by almost 10%. At the moment, futures are near the minimum marks for six months.

Why is oil rising in price? The price of October futures on London’s ICE Futures Exchange for Brent amounted to $95.22 per barrel, which was $0.3 (0.32%) above the previous session’s closing price. At the end of previous trading these contracts grew by $0.8 (0.85%) up to $94.92 per barrel.

The price of WTI futures for September at electronic trades on the New York Mercantile Exchange (NYMEX) was $89.26 per barrel at that time, which was $0.25 (0.28%) above the final value of the previous session. By market close on Friday, the cost of these contracts grew by $0.47 (0.5%) up to $89.01 per barrel.

The previous week Brent had dropped almost 9% and WTI had fallen almost 10%. Currently, futures are near six-month lows.

The fall in Brent prices was caused by low liquidity and “a growing wave of concerns,” including the recession. China’s “zero tolerance” policy for the coronavirus, the release of strategic reserves in the U.S. and the recovery of production in Russia, experts wrote to Goldman Sachs (NYSE:GS).

They worsened their oil price forecasts for Q3 and Q4 2022 to $110 and $125 a barrel, respectively, from $140 and $130 a barrel. The 2023 forecast remained unchanged at $125 a barrel.

The Nasdaq chart today, which reflects the value of stocks of U.S. technology companies, rose 20% from its June low. Over the past trading week, the Nasdaq showed an increase of 3.2%. Analysts believe that this rally is happening on very shaky ground. 

Some even claim that investors are “stupid”. Much of the growth came on the back of falling oil prices. The drop in Brent to nearly $90 was a signal of declining demand in the economy. 

Shrinking consumption should translate into slower inflation, allowing the Fed to tighten its policy at a slower pace. However, the cooling of oil prices on Friday was offset by strong labor market data. Unemployment in the U.S. fell to 3.5%. Still, the best Nasdaq stocks showed gains. 

Fed officials often refer to a robust labor market in their rhetoric as an indication of a rate hike. Last week’s macroeconomic indicators suggest that the regulator remains free to act. Forecasts do not look rosy either. 

Average earnings estimates for the S&P 500 for 2023 are down 2.7% since the end of the first-quarter earnings season. The reason: lower expectations for growth in securities. Analysts’ estimates set the stage for a longer market recovery cycle. Inflation and the “era of expensive money” continue to hold back production.