Oil Prices Jump after Goldman Sachs Forecast
Oil prices jumped after Goldman Sachs predicted that crude would hit $100 per barrel in the next 12 months. Also, the Russian Federation has announced a cut in the export of gasoline and diesel while Saudi Arabia maintains the status quo on production volume.
International benchmark crude Brent traded at $92.31 per barrel, which translates to a 0.38% gain from the closing price of $91.96 a barrel in the previous trading session on Friday. The American benchmark West Texas Intermediate (WTI) traded at the same time at $90.40 per barrel, up 0.41% from Friday’s close of $90.03 per barrel.
The Russian government temporarily limited the export of diesel and gasoline on Thursday. The government explained in a statement that the decision, which aims to stabilize fuel prices on the domestic market, ‘will help saturate the fuel market, which in turn will reduce prices for consumers.’
Russia, one of the largest global oil producers, exports nearly 900,000 barrels per day (bpd) of diesel fuel and 100,000 bpd of gasoline. Although Russia ships less diesel and gasoline than it does crude oil, the export embargo before the winter and ongoing supply concerns have heightened market jitters.
This comes amid tight oil supply, with Saudi Arabia and Russia extending their production curbs until the end of this year.
The prospect of additional stimulus measures in China, the world’s top oil importer, also helps to support oil prices. Further pressuring prices, the number of oil rigs in the US fell to the lowest level since February last year, according to the latest data released by Baker Hughes on Friday.
Goldman Sachs predicts
Brent crude oil is expected to reach $100 per barrel in the next 12 months, up from an earlier forecast of $93 per barrel, Goldman Sachs said in a report on Friday.
According to Goldman Sachs Research, the rise is due to reduced supply from OPEC and to rising demand which is expected to more than offset an increase in oil supply coming from the US. The report explained that ‘the lower for longer’ supply from Saudi Arabia and its OPEC+ partners is the main reason for the forecast change.
‘Saudi Arabia’s recent production announcement signals its strong determination to drive down inventories and push up prices,’ the report underlined. At the same time, there’s scope for Saudi Arabia to boost profits in 2024 depending on which supply cuts are expended, as the increase in oil prices can compensate for the decline in Saudi production.
OPEC is likely to reduce its oil production for longer because of more supply coming from outside the organization — most notably from the US. Supply constraints for parts, rigs, and workers have eased in the US, and producers are drilling and completing wells more quickly with more powerful rigs with less downtime.
‘There will likely be more global demand for oil in 2024 led by Asia, as the slowdown in China’s economy shows signs of ‘bottoming out,’ the report said and added that India and the Middle East are also expected to have large increases in demand.
Commenting on the predictions for the next year, Goldman Sachs Head of Oil Research Daan Struyven explained in the report that OPEC will probably be able to keep Brent prices in a range of $80-$105 next year. #Naira Devaluation Deepens Economic Crisis in Nigeria
