Goldman Sachs says that oil demand will reach an “all-time high.”
The investment bank has warned that rising global uncertainty will increase prices and lead to significant deficits in the short run.
Goldman Sachs, a prominent American investment bank, has warned that the global oil market will soon see record-high demand, significant gaps, and higher crude prices; this is because the number of oil rigs in the US is low, and it’s not clear how much oil will be needed in the long run.
Goldman’s head of oil research, Daan Struyven, said on CNBC’s “Squawk Box Asia” on Monday that the bank expected “pretty sizable deficits” in the second half of this year because demand would hit “an all-time high.”
He also said that the investment bank thinks that Brent crude, a significant benchmark, will go up from just over $80 per barrel to $86 per barrel by the end of the year.
Struyven says that even though US oil production has increased a lot in the past year, the growth rate will slow down for the rest of 2023 because the number of rigs will decrease.
Last week, it was said that the number of oil rigs in the US had dropped to its lowest level since March 2022.
Struyven says that the fact that the G20 energy ministers couldn’t agree on phasing out fossil fuels at their meeting in India last week shows “very substantial” doubt about long-term oil demand.
On Saturday, the International Energy Agency said it thought oil prices would get tighter in the year’s second half. In its most recent report, the agency cut its predictions for the growth of oil demand worldwide. But the head of the IEA, Fatih Birol, said that the projections could be changed if China and some other countries’ economies grew faster. For most of 2022, oil prices went up.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, such as Russia, decided in October to cut their oil production by about 2% of the world’s demand, starting in November and lasting until the end of 2023. To keep prices even, the group later agreed to more limits.
On Monday, the price of Brent oil futures went over $82 a barrel, and US West Texas Intermediate (WTI) futures went over $78 a barrel.
