Goldman Sachs Commodities Research raised its Brent forecast for second and third quarter by $5 a barrel after OPEC and its allies kept the deal unchanged, and said ‘discipline of shale producers’ is likely behind the group’s slower output increase.
The Wall Street bank now sees Brent prices at $75 a barrel in second quarter and at $80 a barrel in third quarter of 2021, it said in a note.
US shale producers have quickly responded to oil price gains in recent years, winning market share as Saudi Arabia and other major producers have cut output, although they held back on boosting production since pandemic-led demand destruction last year.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) on Thursday agreed to extend most oil production cuts until April, after deciding that the demand recovery from the coronavirus pandemic was still fragile.
“OPEC’s supply strategy is working because of its unexpectedness and suddenness,” Goldman said.
“We believe it is now clear that OPEC+ is in fact pursuing a tight oil market strategy, with our updated supply-demand balance pointing to OECD (inventories) falling to their lowest level since 2014 by the end of this year.”
The bank lowered its OPEC+ production forecast by 0.9 million (bpd) over the next six months, and said shale, Iran and non-OPEC supplies are likely to remain highly inelastic to prices until the second half of 2021, allowing OPEC+ to quickly rebalance the oil market.
“Key will be the potential shale supply response, although the latest earnings season suggests investors are still a long way away from rewarding growth,” the bank said, and raised its 2022 US shale production forecast by 0.3 million bpd.
Goldman hikes Brent forecast, sees oil at $80 in third quarter
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Goldman hikes Brent forecast, sees oil at $80 in third quarter
- Iran supplies likely to remain 'inelastic'
- Lowers production forecast for OPEC+
World faces largest-ever oil supply disruption on Middle East war, IEA says
LONDON: The war in the Middle East is creating the biggest oil supply disruption in history, the International Energy Agency said on Thursday, a day after the agency agreed to release a record volume of oil from strategic stockpiles.
Global supply is expected to drop by 8 million barrels per day in March due to the blocking of the Strait of Hormuz, a narrow channel along the Iranian coast, since the US and Israel began a campaign of airstrikes on Iran on Feb. 28.
Middle East Gulf countries have cut total oil production by at least 10 million bpd — a volume equal to almost 10 percent of world demand — as a result of the conflict, the IEA said in its latest monthly oil market report, adding that without a rapid restart of shipping flows these losses were set to increase.
“Shut-in upstream production will take weeks and, in some cases, months to return to pre-crisis levels depending on the degree of field complexity and the timing for workers, equipment and resources to return to the region,” the agency said.
