Goldman Sachs continues to carry a bullish view on oil regardless of the continuing market sell-off, reiterating in a word its stance that “the skew to prices from here is squarely skewed to the upside.”
Goldman Sachs strategists, together with Jeffrey Currie and Damien Courvalin, stress-tested their bullish view and located that regardless of rising considerations over oil fundamentals, each for increased provide and weaker demand, Brent’s honest worth would stay above present market forwards within the second half of 2022 and in 2023.
With low inventories and a possible Saudi/UAE ramp-up in manufacturing within the area of 500,000 barrels per day (bpd), which is able to additional deplete “record low spare capacity,” the dangers are firmly skewed to the upside, Goldman Sachs’ analysts wrote within the word.
Under an opposed state of affairs, Brent’s honest worth could be $120 within the second half of 2022 and $110 in 2023, down from Goldman’s forecasts of $135 and $125 a barrel, respectively, the financial institution’s strategists famous.
Even the worst-case state of affairs would nonetheless suggest a Brent honest worth of $105 for H2 2022 and $90 a barrel in 2023, additionally above market forwards.
“As a result, we reiterate our bullish oil price view following the recent sell-off,” Goldman Sachs stated.
Early on Thursday, oil costs had been down by 4% to ranges final seen in February, simply earlier than the Russian invasion of Ukraine.
At the top of final month, Jeffrey Currie, international head of commodities analysis at Goldman Sachs, stated that the upside threat in crude oil and refined merchandise “is tremendously high right now.” The current pullback in oil costs might be a shopping for alternative as a result of costs are set to go increased from right here this summer season, in line with the Wall Street financial institution.
Last week, Goldman’s Courvalin informed CNBC that oil may nonetheless hit $140 per barrel.
“$140 is still our base case because, unlike equity, which are anticipatory assets, commodities need to solve for today’s mismatched supply and demand,” Courvalin stated.
By Michael Kern for Oilprice.com
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