Goldman Sachs cuts oil forecast
Goldman Sachs analyst Callum Bruce cut the firm's oil price forecast in a note Friday, telling investors that the deficit is still pending on the China reopening.
"Brent prices have been range-bound since the November sell-off as markets have been caught between still soft prompt fundamentals and a brightening macro outlook," wrote Bruce.
"This choppy price action masks that time spreads have actually strengthened on a pickup in China oil demand while back-end prices have softened, because of producer hedging and possibly a market reassessment of the long-term hit to Russian supply."
Goldman Sachs' 2023 annual average estimates for demand and supply are roughly similar to its previous expectations. The analyst states that upward supply adjustments "largely reflect marking-to-market beats in the US and Russia" but are offset somewhat by downward revisions to Norway, Iraq, and non-core OPEC. In addition, the firm still expects moderate US shale growth this year.
The analyst lowered the firm's Brent price path by $5/bbl. He explained that while they still expect long-dated prices to rise to nearly $80/bbl by the end of 2024, the rise in spare capacity from the ongoing surplus and the lower starting point for long-dated prices implies the adjustment will take longer, and Goldman Sachs "now expect long-dated prices to increase to $75/bbl by end-2023, versus $80/bbl previously."
By Sam Boughedda