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Goldman Sachs raised on Wednesday its 12-month ahead forecast for Brent Crude oil prices to $100 per barrel from $93 previously expected as it sees stronger inventory draws with the extended OPEC+ cuts and global demand growth.
“We have nudged up our 12-month ahead Brent forecast from $93 a barrel to $100 a barrel as we now expect modestly sharper inventory draws,” analysts at Goldman Sachs wrote in a note on Wednesday, as carried by Reuters.
The key reasons for the higher expected Brent Crude prices are that the lower OPEC oil supply and higher demand would more than offset the rise in U.S. oil production, according to Goldman Sachs.
The cuts from the OPEC+ group led by Saudi Arabia and rising demand would allow the cartel and its allies to keep Brent prices in a range of between $80 and $105 a barrel in 2024, the Wall Street bank noted.
Goldman doesn’t see a sustained period of Brent holding above $105 next year, but it doesn’t expect prices to trade below $80 a barrel for a prolonged period, either.
Earlier this month, Goldman Sachs said that oil prices could hit $107 per barrel next year if OPEC+ producers do not reverse their production cuts in 2024.
The bank issued this view shortly after Saudi Arabia extended its 1 million barrels per day (bpd) cut through December 2023 in a move it said reinforced “the precautionary efforts made by OPEC Plus countries with the aim of supporting the stability and balance of oil markets.”
But oil at $107 per barrel is not Goldman’s base-case scenario, the bank warned two weeks ago.
“This is not our baseline view because we think the producer group is unlikely to pursue prices well above $100/bbl given the strong supply and investment response to the 2022 energy crisis, our high-frequency tracking of U.S. shale, and the political importance of U.S. gasoline prices,” per Goldman’s note carried by Reuters.
Early on Wednesday in Asian trade, Brent was trading down by 1.3% at $93.10 a barrel on profit-taking ahead of the Fed interest rate decision later today.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.