Goldman Sachs analysts have predicted the oil market to be at a deficit of around three million barrels per day by the fourth quarter of 2020, although keeping its earlier forecast of Brent Crude target at $49 by year-end and $65 by the third quarter of 2021.
In a new report on Friday, the bullish Goldman analysts said recent floating storage of oil is more “transient inventory allocation dynamics” instead of a signal of a new glut.
“We estimate that the oil market remains in deficit with speculative positioning now at too low levels,” Goldman Sachs said.
Earlier this month, the company forecast Brent Crude to reach $65 a barrel in Q3 2021, while it could end next year lower, at $58 a barrel.
Goldman Sachs also expects WTI Crude to hit $55.88 a barrel by Q3 2021, from $51.38 a barrel in earlier forecasts.
“There is a growing likelihood that vaccines will become widely available starting next spring, helping support global growth and oil demand, especially jet,” the Goldman analysts had said earlier this month.
On Friday, oil prices rose for a fourth day in a row, putting crude on track for a weekly gain of about 10 per cent, after Saudi Arabia pressed allies to stick to production quotas.
International benchmark Brent crude was upped by 0.5 per cent to $43,and United States benchmark West Texas Intermediate surged 0.6 per cent to $41.
Amid the uncertainty in the oil market, OPEC+ had at its meeting on Thursday re-emphasised sustaining “full conformity” with oil production cuts, which was held to review compliance targets.
On the same day, Saudi Arabia’s energy minister warned traders against heavily betting in the oil market, promising that those who gamble on prices will be hurt “like hell.”
The world’s largest crude exporters has insisted on continued flexibility on production cuts and made no changes to the current output reduction of 7.7mbpd until December, or around eight per cent of global demand.
At a news conference, when asked about the organisation’s next steps, OPEC’s most influential minister, Prince Abdulaziz, said, “Anyone who thinks they will get a word from me on what we will do next is absolutely living in a La La Land… I’m going to make sure whoever gambles on this market will be ouching like hell.”
According to him, the OPEC+ could hold an uncustomary meeting in October if oil demand worsens and COVID-19 cases increase substantially.
