Energy News Beat
ENB Pub Note: While much of the markets are looking to the bearish side of the oil market, I am almost in the perma bull market looking to the $80 dollar, and Michael is leaning more to the lower side. We will be covering much of this in the next few weeks on the podcast.
Goldman Sachs Group Inc. joined fellow banks Monday in cutting oil price forecasts as Wall Street increasingly sees a home for crude in the $60s.
Goldman initially stuck with previous price projections when OPEC+ confirmed plans to increase oil production earlier this month, but with US economic growth under mounting pressure, the bank lowered its outlook price in a note. Its expected range for Brent was reduced to $65-$80 a barrel from $70-$85.
“We expect Brent to stay above $70 a barrel in coming months,” but “we no longer see $70 as the price floor,” head of commodities research Daan Struyven wrote. Brent futures are currently hovering around $71.
Goldman’s revision follows downgrades in recent weeks by Morgan Stanley and Bank of America Corp., which both see Brent in the high $60s during the second half.
Citigroup Inc. and JPMorgan Chase & Co. have been predicting prices would end the year in the mid-or-low $60s for some time. Beyond Wall Street, top oil trading houses such as Vitol Group and Gunvor Group — which have had a bullish stance on crude in recent years — also turned more pessimistic.
Oil’s retreat has been cheered by US President Donald Trump and offers relief for consumers and central banks following years of rampant inflation. But it poses financial risks for producers in the American shale oil industry and for the Organization of Petroleum Exporting Countries, led by Saudi Arabia.
Citigroup has long been the most bearish of the pack, projecting that crude will average $60 a barrel in the second and third quarters before sinking further to $55 in the fourth.
Wall Street’s preliminary assessments for next year suggest little scope for upside, with JPMorgan anticipating that crude will average $61 a barrel — and may even touch $50 as Trump pushes to keep sanctioned Russian and Iranian barrels in the market.
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