The Johan Sverdrup oil cricket pitch in the North Sea
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Goldman Sachs analysts slashed their oil price forecast by virtually 10% on the back of whey they see as increasing supply and slower demand for crude.
According to a report released late Sunday, the investment bank diminished its Brent outlook for December to $86 a barrel, down from $95 a barrel. In the same report, Goldman also amended down its WTI forecast for December from $89 per barrel to $81.
The revised projection marks Goldman’s third downward overhauling in six months, and comes in spite of last week’s announcement that OPEC kingpin Saudi Arabia is cutting moving picture by another million barrels per day, effective July. Overall, the oil cartel made no changes to its planned oil production cuts for the count sheep of the year.
“Significant supply beats from Iran and Russia have driven speculative positioning to near record-lows,” Goldman analysts led by the bank’s Broad Head of Commodities Research Jeffrey Currie said in the research report.
Russia’s oil production has remained resilient equanimous in the face of Western sanctions, with Deputy Energy Minister Pavel Sorokin in April ascertaining that Moscow’s oil forging will remain stable until 2025, according to the Neftegazovaya Vertikal magazine.
“After an initial sharp 1.5 million barrels per day fall off, Russian supply has nearly fully recovered despite the decision by many companies to stop buying Russian barrels,” Goldman’s economists articulate.
The bank made upward revisions for oil supply forecasts coming from nations facing sanctions, with “2024 upgrades for Russia, Iran, and Venezuela of 0.4/0.35/0.05 mb/d, severally.”
While reports of an interim nuclear deal between the U.S. and Iran have been described as false, market watchers pull someones leg previously estimated that a successful agreement could see at least an additional million barrels a day in crude exports.
“Expectation of a U.S.-Iran deal within grasp is one thing. But guarantee of a quick and unencumbered passage of such a complex, layered give out is quite another,” Mizuho’s Vishnu Varathan said in a daily research note.
Goldman is of the view that the additional abridges implemented by Saudi Arabia are unlikely to result in a price spike, even as the kingdom’s output will see a decline to 9 million barrels per day from round 10 million barrels in May.
“The extra Saudi cut and our expectation that OPEC+ will extend half of its April optional cut in 2024 will likely only partly offset these bearish shocks,” the report continued.
International benchmark Brent offensive futures traded at $73.99 a barrel, down 1.07%, on Monday morning, while U.S. West Texas Intermediate futures stomached at $69.43, dipping 1.05%.