Goldman Sachs has increased its Brent oil price for the second half of the year 2022 and first half of year 2023 by $10 to $135 a barrel reasoning that a structural supply deficit was still unresolved. Analyst at the ban reported on June 6 that prices would need to be increased for supply to normalize by end of 2023.
Goldman said that a “politically created surplus” led by modest decrease in Russian oil exports, large releases from Strategic Petroleum Reserves and strict Covid-19 lockdowns was ending as Chinese demand recovers and Russian output dips further due EU ban. European Union leaders have agreed on restriction of Russian crude imports which will be in effect by the end of year 2022 targeting to stop 90% of Russian crude imports by year end by 27 nations. The bank observed Russian production declining to 9.8 million barrels per day (bpd) by year end from 10.8 bpd in May. The market remained tighter due to spike in prices while supply remains inelastic as reported by Wall Street Bank.
“On the interest side, the negative worldwide development motivation stays deficient to rebalance inventories at current costs. Accordingly, we accept oil costs need to revitalize further to standardize the unreasonably low degrees of worldwide oil inventories, as well as OPEC and refining spare limits,” it added.
Oil costs were steady on Tuesday, with Brent rough fates around $119.07 barrel, as the market offset risk opinion with supply concerns and the possibility of more popularity as China loosens up its COVID controls.