Oil prices up 20% this year. Goldman Sachs forecasts further 20% jump this year
Consumption will get back to pre-virus levels by late July, the bank said in a note
Consumption will get back to pre-virus levels by late July, the bank said in a note
Oil prices will rally sooner and higher than previously thought as the global energy demand recovery outpaces the supply response from the OPEC+ alliance, shale and Iran, according to Goldman Sachs Group Inc.
Consumption will get back to pre-virus levels by late July, while output from major producers is likely to remain “highly inelastic" to the rising prices, the bank said in a note. Goldman raised its Brent forecasts by $10 a barrel, to $70 next quarter and $75 in the following three months.
“This faster re-balancing during what was expected to be the dark days of winter will be followed by a widening deficit this spring as the ramp-up in OPEC+ production lags our above-consensus demand recovery forecast," bank analysts including Damien Courvalin said in the note.
Oil’s rebound to levels last seen before Covid-19 wreaked havoc on the global economy has been driven by Saudi Arabia’s unilateral output cuts together with the improving demand outlook. The rally has also been supported by investors using crude to position for a reflationary environment, Goldman said. Brent oil traded above $63 a barrel on Monday and is up around 22% this year.
Supply will keep lagging behind demand for several reasons, the bank said:
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