Goldman Sachs has predicted that Brent crude prices will rise to $86 per barrel this summer amid strong consumer demand which will put the market into a sizeable deficit in the third quarter of this year.
Data from the international oil market showed that oil prices started this week higher with a slight gain in Asian trade on expectations of higher fuel demand during the summer driving season.
Based on the current situation in the market, the leading investment bank hinged its prediction on anticipated higher consumer demand and spending, which it estimated will leave the oil market in a supply deficit of 1.3 million barrels per day (bpd) in the third quarter.
According to a note from Goldman Sachs, the bank revised its oil demand growth estimate for this year, by 200,000 barrels a day (bpd) to 1.25 million bpd but noted it still expected a robust global demand thanks to recovering jet fuel consumption.
Goldman’s analysts wrote: “We still see a $90/bbl ceiling in our base case of no geopolitical supply hits, and the risks to our $75-$90 range as modestly to the downside.”
The investment bank also forecasts a floor of $75 per barrel under Brent, due to physical demand for crude, which tends to rise amid lower prices, including in China and in the U.S. for the refill of the Strategic Petroleum Reserve (SPR).
It would be recalled that last week, a Fitch Solutions company, BMI, projected that Brent Crude oil price was expected to average $85 per barrel this year and $82 a barrel next year, as it kept its outlook on oil prices despite the balance of risks lying “firmly to the downside.”
The firm’s forecast came amid early last week oil prices crash after OPEC+ detailed a production plan through 2025, which includes the possibility to begin unwinding some of the current cuts after the end of the third quarter.
