(Aug 8): The recent drop in the Brent crude price was driven by low liquidity and a “mounting wall of worries”, including concerns over a recession, China’s zero-Covid policy and real estate sector, the US Strategic Petroleum Reserve release, and Russian production recovering, Goldman Sachs said in a note on Sunday (Aug 7).
“We believe that the case for higher oil prices remains strong, even assuming all these negative shocks play out, with the market remaining in a larger deficit than we expected in recent months,” analysts including Damien Courvalin said in the note.
The bank reduced its third-quarter (3Q) Brent forecast to US$110/bbl and for 4Q to US$125, down from US$140/bbl for 3Q and US$130/bbl for 4Q previously. The outlook for 2023 is unchanged at US$125/bbl.
Balancing the market still requires demand destruction on top of the ongoing economic slowdown, and that requires a sharp rebound in retail fuel prices, according to Goldman Sachs.
“We still expect that Brent prices will need to rally well above market forwards,” the bank said.
Source: TheEdge - 9 Aug 2022
Created by edgeinvest | Mar 28, 2024
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