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The price of retail gasoline just dipped below $4 per gallon, AAA data showed on Thursday, but prices could rise to $5 per gallon by the end of the year, Goldman Sach’s Head of Energy Research Damien Courvalin told Bloomberg TV on Thursday.
“We think that’s the level at which we need to see sustained pricing to eventually solve the market deficit,” Courvalin told Bloomberg.
As for crude oil prices, Courvalin sees Brent climbing to $130 by the end of the year. “So we think Brent goes to $130 per barrel at the end of this year to reflect this need for sustained high prices.”
“We’re still in deficit. Despite growth slowing, prices still have work to do, and that’s higher from here.”
Goldman’s forecast assumes China’s demand for jet fuel and diesel only grows moderately from here until the end of 2023, pressured by its zero-Covid policy.
That scenario could shift, Courvalin points out. “If we’re talking half a million barrels per day of Chinese demand going back to its prior highs, just on our pricing model, that’s $15 upside per barrel to Brent prices.”
In the shorter term, Courvalin sees gasoline and diesel prices going up as refiners head into turnaround season due to the lack of a typical inventory buffer that is currently not present in the market.
As of the latest EIA data, total motor gasoline inventories in the United States were 6% below the five-year average for this time of year, while distillate fuels were 24% below the five-year average.
Brent crude was on the upswing on Thursday, trading $2.38 (2.44%) higher on the day at $99.78, pressing to reclaim its position above $100 per barrel—a position the international crude oil benchmark has held for most of the summer.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.