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Will Oil Continue To See Extreme Volatility?

Will Oil Continue To See Extreme Volatility?

China's recovery and U.S. shale…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Goldman: Oil Could Hit $85 In The Fourth Quarter

A colder winter and soaring natural gas prices globally could lead to higher-than-expected oil prices at the end of this year, with the potential for oil hitting $85 per barrel in the fourth quarter, Goldman Sachs says.

Goldman, which has a price forecast of $80 a barrel oil for the last quarter of 2021, believes that the natural gas crunch combined with a colder-than-usual winter in Europe and Asia could pose an upside risk of $5 a barrel to its Q4 price projection, the bank’s analysts said in a note on Sunday carried by Reuters.

“The tightness in global gas supplies creates a clear and potentially meaningful bullish catalyst for the oil market this winter, larger than the downside risk to global oil demand from another Delta-like COVID wave,” the analysts at Goldman Sachs wrote.

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According to the investment bank, oil demand could jump by 900,000 barrels per day (bpd) if the coming winter is colder than usual in the northern hemisphere.

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Europe’s tight gas market, low wind speeds, abnormally low gas inventories, and record carbon prices have combined in recent weeks to send benchmark gas prices on the continent and power prices in the largest economies to record highs. Record European natural gas prices are sending Asian spot prices of liquefied natural gas (LNG) to record levels for this time of the year, too.

Last week, Bank of America Global Research said that oil prices could hit $100 per barrel over the next six months if we have a colder-than-usual winter, which could be the most important driver of global energy markets in the coming months. BofA sees upside for oil prices amid modest market deficits in the next few months. It also sees potential for oil to hit $100 a barrel earlier than its mid-2022 call from June if the winter is colder than normal.  

By Tsvetana Paraskova for Oilprice.com

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Leave a comment
  • Mamdouh Salameh on September 20 2021 said:
    Even before the surge in natural gas prices, crude oil prices were headed on an upward trajectory underpinned by very robust fundamentals in the global oil market.

    As a result, we could expect Brent crude price to hit $80 a barrel before the end of the year and average $71-$72 in 2021 with global oil demand hitting 99-100 million barrels a day (mbd).

    Therefore, a continued rally in natural gas prices combined with a harsh Winter could possibly send Brent rise higher than $80 a barrel before the end of the year.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • George Doolittle on September 20 2021 said:
    Goldman Sachs got absolutely smashed today as their crazy commodity bets start going haywire left and right of late.

    Long US Treasuries
    Strong buy

Leave a comment




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