Goldman Sachs analysts are less bullish on oil heading into the second half of the year.
The firm lowered its year-end price target on Brent (BZ=F) to $86 per barrel, down from a prior forecast of $95. West Texas Intermediate (CL=F) is predicted to cost $81 per barrel, compared to the previous prediction of $89.
“Supply beats drive the bulk of the softening in this update,” Callum Bruce and a team of analysts wrote in a note to investors.
Oil nations such as Russia and Iran have been making their way into the market despite Western sanctions.
The analysts said “significant supply beats from Iran and Russia have driven speculative positioning to near record-lows.”
China’s COVID policy, along with recession fears and the US’s record Strategic Petroleum Reserve release last year, all weighed on prices in the past 12 months. Exactly one year ago, Brent crude prices were sitting at around $120 per barrel. Today, they’re just north of $71.
“The extra Saudi cut and our expectation that OPEC+ will extend half of its April voluntary cut in 2024 will likely only partly offset these bearish shocks, because we are also nudging down demand modestly on petrochemical weakness,” wrote Bruce.
Prices have deteriorated in the last two months despite OPEC+’s surprise cut in early April. Earlier this month, Saudi Arabia said it will slash its oil output by another 1 million barrels per day starting in July.
Goldman Sachs’ analysts are more bullish on crude going into next year.
“While increased oil supply reduces the upside for oil, we remain relatively constructive as our forecast that rising EM demand, slowing US supply, and OPEC cuts lift Brent to $93/bbl (vs. $100 previously) by May 2024, sits 25% above the forwards,” wrote Bruce.
Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre
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June 12, 2023 at 11:48PM
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Goldman Sachs cuts price target on oil by almost 10% - Yahoo Finance
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