Goldman Sachs has reviewed its forecast for summer peak Brent Crude prices to $87 per barrel, up by $2 from earlier expectations, citing land inventory drawdowns due to seaborne trade disruptions from the Red Sea crisis.
“OECD commercial stocks on land have drawn somewhat faster than expected as the redirection of flows away from the Red Sea has increased inventories on water,” analysts at the investment bank wrote.
According to Goldman, the international benchmark Brent Crude will likely remain in the $70-$90 a barrel trading range in the near term amid modest geopolitical premium from the wars in Ukraine and the Middle East.
The Organization of Petroleum Exporting Countries(OPEC+) has higher spare capacity now, which would help it mitigate any real disruptions to supply in most scenarios, the bank’s analysts say.
Moreover, non-OPEC+ supply is set to keep pace with expected solid growth in global oil consumption this year, Goldman Sachs notes.
The Wall Street bank expects the OPEC+ alliance to decide in early March to roll over the first-quarter cuts into the second quarter, and only gradually to unwind the supply reductions beginning in the third quarter of this year.
Oil industry watchers and analysts are also betting on OPEC+ extending its oil production cuts beyond the first quarter of 2024 into the next quarter, a new Bloomberg survey revealed.
Goldman Sachs expects Brent prices to average around $80 a barrel in 2025 and doesn’t see as likely that the price could drop below $70 for a sustained period of time.
Last week, analysts at Deutsche Bank said that a nearly balanced market in the first half of the year and seasonal strengthening of demand in the second half are set to push the price of Brent Crude To $88 per barrel by the end of 2024.
“We look for continued OPEC+ discipline in a nearly balanced market for H1, and seasonal strength in H2,” the bank’s strategists wrote in a note last week carried by FXStreet.
