Goldman Sachs Sees Oil at $96 This Year

Goldman Sachs has raised its oil price forecasts “significantly” through 2023, its latest commodities research note has revealed.

The company now sees Brent spot prices at $96 per barrel in 2022 and at $105 per barrel in 2023, according to the research note, which was sent to Rigzone. Goldman Sachs’ prior 2022 Brent spot forecasts stood at $81 per barrel for 2022 and $85 per barrel for 2023, the note highlighted.

Looking quarter by quarter, the company’s latest research note sees Brent spot prices hitting $90 per barrel in the first quarter of this year, $95 per barrel in the second quarter and $100 per barrel in both the third and fourth quarters. Goldman Sachs’ previous forecasts saw Brent spot prices at $85 per barrel in Q1 and $80 per barrel in Q2, Q3 and Q4.

The Brent spot price is projected to be $105 per barrel in each quarter of 2023, the note outlined. Goldman Sachs’ previous forecast saw the Brent spot price at $85 per barrel in each quarter of next year.

“Robust fundamentals have reversed last year’s oil price meltdown, with the market remaining in a surprisingly large deficit as the Omicron demand hit is so far smaller, and likely briefer, than that of Delta exc. China,” Goldman Sachs stated in its latest research note.

“While the hit to Chinese demand will be large due to its zero-Covid policy (-0.5 mb/d in 1H22), we see it offset by strong demand in 4Q21, gas-to-oil substitution and supply disappointments. Net, we expect inventory draws to narrow but persist through 1Q22, with the global surplus in 2Q22 smaller than seasonal at 0.4 mb/d,” the company added in the note.

“By summer, this will bring OECD inventories to their lowest level since 2000 alongside a decline in OPEC+ spare capacity to historically low levels of c.1.2 mb/d,” the note continued.

In the note, Goldman Sachs highlighted that it was not forecasting Brent trading above $100 per barrel on an argument of running out of oil “as the shale resources is still large and elastic”.

“This mechanism will, however, likely require ever rising oil prices given the reluctance to invest in oil during the energy transition and the gradual depletion of shale’s geological, midstream and service capacities,” Goldman Sachs stated.

Earlier this month, Standard Chartered revealed that it saw the price of Brent oil averaging $108 per barrel in 2026. It also raised its 2022 Brent forecast by $8 per barrel to $75 per barrel and its 2023 Brent forecast by $17 per barrel to $77 per barrel.

Also in January, the U.S. Energy Information Administration (EIA) revealed that it now sees Brent spot prices averaging $74.95 per barrel in 2022, which marks a $4.90 increase on its previous 2022 projection of $70.05 per barrel. Looking ahead to 2023 the EIA forecasted that average Brent spot prices will drop to $67.50 per barrel.

According to Fitch Solutions Country Risk & Industry Research’s latest projections, which were also made this month, the average price of Brent will hit $72 per barrel this year, $73 per barrel in 2023, $75 per barrel in 2024, and $78 per barrel in both 2025 and 2026.

At the time of writing, the price of Brent oil stood at $87.74 per barrel.

To contact the author, email andreas.exarheas@rigzone.com