Goldman Sachs raised its already optimistic forecast on Sunday, expecting Brent crude oil to reach US$90 per barrel by the end of the year. This is higher than the previous $80.
The Wall Street bank expects US crude oil prices to reach US$87 per barrel, higher than the previous US$77.
The company stated that global demand for the Delta model is recovering “even faster than our consensus forecast above”, and global supply is “below our consensus forecast.”
The world benchmark Brent crude oil rose another 1.5% on Monday to $79.25 per barrel. This makes Brent crude oil expected to hit its highest closing price since October 2018.
US crude oil rose 2% on Monday to close at $75.45 per barrel. This is the highest closing price since October 3, 2018. This is the first time since mid-July that oil prices have closed above US$75 per barrel.
The latest earnings added to the significant recovery after the Covid outbreak, when US crude oil fell below zero for the first time in history. Oil fell to the bottom of minus US$40 per barrel in April 2020, about US$115 lower than the current level.
The pandemic has forced American Petroleum Corporation and OPEC to significantly reduce production – and most of these supplies are still suspended.
Goldman Sachs said that the current supply and demand deficit “in our view, will not be reversed in the next few months, because its scale will overwhelm OPEC+’s willingness and ability to expand.”
At the same time, Goldman Sachs pointed out that the return of shale oil in the United States “has just begun.”
U.S. oil supplies were affected by Hurricane Ida, which caused production in the Gulf of Mexico to cease production for a long time. Goldman Sachs stated that the storm “should prove to be the most optimistic hurricane in American history.”
Goldman Sachs said that this will lay the foundation for oil inventories to reach their lowest level since 2013.