Goldman Sachs, one of the world’s leading investment banks, has said crude oil prices could rise to $65 per barrel in the second half of the year in July given the present tight oil market and the gradual rebound in demand.
The investment bank disclosed in a note on Sunday after U.S government data showed a deficit of 2.3 million barrels per day in the final quarter of 2020 and lower supplies from crude oil producers outside the OPEC+ group.
The bank predicted a deficit of 900,000 barrels per day in the first half of 2021, up from the 500,000 barrels per day it previously predicted.
Goldman said this could boost Brent crude oil, a Nigerian type of oil, to $65 a barrel by July, with less industry investment in supply skewing risks to the upside in 2022, the bank said. Brent rose above $57 on Tuesday.
“We are moderating the demand rebound to account for a slower start of vaccination and a cautious pace of reopening, leading in particular to a slower recovery in jet demand,” Goldman said.
The bank predicted that demand for crude oil will rise by 5.3 million barrels per day in the six months to July 2021, lower than the 6.8 million barrels per day previous forecast.
This is after Saudi Arabia announced that it would make an additional 1 million barrels per day cut in February and March, while the rest of OPEC plus agreed to maintain the current production level.
“The nature of the latest OPEC+ agreement will also contribute to this fast tightening market as higher demand this spring will stress the ability of producers to restart production,” Goldman said.
