Brent crude prices are set to rise to $86 per barrel this summer amid strong consumer demand which will put the market into a sizeable deficit in the third quarter, according to Goldman Sachs.
Oil prices started this week higher, with a slight gain in Asian trade on expectations of higher fuel demand during the summer driving season.
As of 8:01 a.m. EDT, the U.S. benchmark, WTI Crude, was trading at $76.03, up by 0.65%. Brent Crude, the international benchmark, had moved above the $80 per barrel mark and traded at $80.17, up by 0.67% on the day.
Brent Crude prices could rise to $86 per barrel this summer, as healthy consumer demand and spending will leave the oil market in a supply deficit of 1.3 million barrels per day (bpd) in the third quarter, according to a note from Goldman Sachs, quoted by Reuters.
The Wall Street bank revised its oil demand growth estimate for this year, by 200,000 bpd to 1.25 million bpd, but noted it still sees robust global demand thanks to recovering jet fuel consumption.
“We still see a $90/bbl ceiling in our base case of no geopolitical supply hits, and the risks to our $75-$90 range as modestly to the downside,” Goldman’s analysts wrote.
The investment bank also sees a floor of $75 per barrel under Brent, due to physical demand for crude, which tends to rise amid lower prices, including in China and in the U.S. for the refill of the Strategic Petroleum Reserve (SPR).
Last week, BMI, a Fitch Solutions company, said that Brent Crude is expected to average $85 per barrel this year and $82 a barrel next year, as it kept its outlook on oil prices despite the balance of risks lying “firmly to the downside.”
Oil prices fell early last week after OPEC+ detailed a production plan through 2025, which includes the possibility to begin unwinding some of the current cuts after the end of the third quarter.
By Tsvetana Paraskova for Oilprice.com
Lead image (Credit: Reuters)
