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Goldman sees upside risks to $90/bbl Brent price forecast

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Oct 25 (Reuters) – Goldman Sachs stated a powerful rebound in world oil demand might push Brent crude oil costs above its year-end forecast of $90 per barrel.

The U.S. funding financial institution stated it anticipated oil demand will shortly attain pre-COVID-19 ranges of round 100 million barrels per day (bpd) as consumption in Asia rebounds after the Delta COVID-19 wave.

As well as, the financial institution estimated gas-to-oil switching might contribute not less than 1 million bpd to grease demand.

“Whereas not our base-case, such persistence would pose upside threat to our $90/bbl year-end Brent worth forecast,” Goldman stated in a analysis observe dated Oct. 24.

Tight world provide and powerful demand have pushed oil costs to multi-year highs, with U.S. West Texas Intermediate crude futures buying and selling at $84.38 a barrel and Brent crude futures at $86.26 by 0731 GMT on Monday.

“We would wish costs to rise to $110 /bbl to stifle demand sufficient to steadiness the market deficit we at present see in 1Q22 given our expectation that OPEC+ continues on the present path of +0.4 mb/d per 30 days will increase in quotas.”

The Group of the Petroleum Exporting International locations, Russia and their allies, referred to as OPEC+ earlier this month stated it might proceed an current deal underneath which it agreed to spice up output by 400,000 bpd a month till not less than April 2022.

On China, Goldman stated: “Regardless of the latest energy cuts and impacts to industrial exercise in China, oil demand is probably going as an alternative supported by switching to diesel powered turbines and diesel engines in LNG vans, in addition to by a ramp up in coal manufacturing.”

Reporting by Seher Dareen and Nakul Iyer in Bengaluru. Enhancing by Jane Merriman

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