Goldman: Oil to top $80 within six months
The investment bank is now growing even more bullish, predicting that the oil market has likely balanced, and that Brent Crude will reach $82.50 a barrel within six months.
Goldman sees the price of Brent reaching $75 per barrel within three months, lifting its short-term oil price projection from the previous $62 forecast.
“The rebalancing of the oil market has likely been achieved, six months sooner than we had expected,” the bank’s analysts said in a report, as carried by Bloomberg.
“The decline in excess inventories was fast-forwarded in late 2017 by stellar demand growth, high OPEC compliance, heavy maintenance as well as collapsing Venezuela production,” Goldman noted.
At the end of last year, Goldman Sachs was more optimistic about the speed of the oil market rebalancing than many experts and other banks, and OPEC itself. The investment bank expected that the global oil overhang will have cleared by the middle of 2018, accelerating OPEC’s exit from the production cut pact that is currently set to expire at the end of 2018.
“The oil re-balancing continued its progress through November,” thanks to factors including “stellar” oil demand growth, Goldman said in December.
Now Goldman has revised further up its global oil demand growth forecast, to reflect strong emerging market economies that will drive oil demand growth.
Expectations of robust oil demand growth also prompted JPMorgan to raise its forecast, seeing Brent prices averaging $70 this year, with a peak of $78 a barrel at some point in the first half, when strong demand will continue to push prices up.
JPMorgan also revised up its average forecast for WTI Crude by $10.70 to $65.63 per barrel this year.