Tight oil market in first half could push crude to $65, says Goldman

Oil prices could rise to $65 a barrel by July amid a tight oil market and slow rebound in demand, Goldman Sachs said.

The bank said in a note on Sunday data indicated a deficit of 2.3 million barrels per day (bpd) in the fourth quarter of 2020 driven by higher demand and lower supplies from producers outside the OPEC+ group.

It forecast a deficit of 900,000 bpd in the first half of 2021, a higher level than its previous prediction of 500,000 bpd.

This could help push benchmark Brent crude to $65 a barrel by July, with less industry investment in supply skewing risks to the upside in 2022, the bank said. Brent was above $55 on Monday.

“We are moderating the demand rebound to account for a slower start of vaccination and a cautious pace of reopening, leading in particular to a slower recovery in jet demand,” Goldman said.

The bank expected demand to rise by 5.3 million bpd in the six months to July, down from its previous forecast of 6.8 million bpd.

Saudi Arabia has pledged to make additional, voluntary oil output cuts in February and March, while most members of the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, agreed to keep output steady.

“The nature of the latest OPEC+ agreement will also contribute to this fast tightening market as higher demand this spring will stress the ability of producers to restart production,” Goldman said.

By Nakul Iyer 

Gh Extractives

Ghextractives.com is an independent multimedia portal that seeks to provide credible information and news content to readers especially players in the extractive sector in Ghana, Africa and beyond. It also provides a unique platform for players in the energy sector to market their products and reach a wider audience

View All Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.