Goldman Sachs on Tuesday cut its 2023 oil price forecast on expectations of weaker demand and a stronger dollar, but said ongoing global supply problems reinforced its long-term bullish outlook.
Goldman’s commodity research division lowered its forecast for next year by $17.5 a barrel on average, even though it sees a global oil market shortfall in the fourth quarter of 2022 and 2023.
The bank revised its oil price forecast downward by $19 per barrel on average for the period from the fourth quarter of 2022 to the fourth quarter of 2023 and sees global demand growing by 2 million barrels per day in 2023 ( bpd) at current prices, versus a previous projection of 2.5 million bpd.
The near-term path of oil prices is likely to remain volatile, Goldman said, adding that the strong appreciation of the dollar and expectations of weaker demand will continue to push crude down for the rest of this year.
“Although it may be surprising that oil is projecting such low growth expectations, this reflects the huge exodus of investors, forced by extreme price volatility this spring,” the note said.
It would take a hard landing for the economy and a contraction in global GDP growth to justify keeping prices low, he added.
Oil closed the session this Tuesday with gains, with WTI trading at 78.56 dollars per barrel, gaining 2.41%, while Brent gained 2.70% and closed the session trading at 86.33 dollars. The impulse was given by the expectation of a lower offer, with the entry of Hurricane Ian to the coasts of the United States and by the prospect that OPEC could cut its joint oil production during its joint meeting on October 5.
Goldman does not expect OPEC to increase its production quotas this year and believes the group will stabilize output near current levels in 2023.
With information from Reuters
