THE oil market has rebalanced as Brent will reach $82.50 a barrel within six months, Goldman Sachs, a leading global investment banking, securities and investment management firm that provides a wide range of financial services said. Oil Goldman Sachs has held one of the most optimistic views on the re-balancing of the oil market and oil prices in the near term. It sees the price of brent reaching $75 per barrel within three months, lifting its short-term oil price projection from the previous $62 forecast. “The rebalancing of the oil market has likely been achieved, six months sooner than we had expected,” the bank’s analysts said in a report.
“The decline in excess inventories was fast-forwarded in late 2017 by stellar demand growth, high Organisation of Petroleum Exporting Countries, OPEC’s compliance, heavy maintenance as well as collapsing Venezuela production,” Goldman noted.
At the end of last year, Goldman Sachs was more optimistic about the speed of the oil market rebalancing than many experts and other banks, and OPEC itself. The investment bank expected that the global oil overhang would have cleared by the middle of 2018, accelerating OPEC’s exit from the production cut pact that is currently set to expire at the end of 2018.
“The oil re-balancing continued its progress through November,” thanks to factors including “stellar” oil demand growth, Goldman said in December. Now Goldman has revised further up its global oil demand growth forecast, to reflect strong emerging market economies that will drive oil demand growth.
Expectations of robust oil demand growth also prompted JPMorgan to raise its forecast, seeing Brent prices averaging $70 this year, with a peak of $78 a barrel at some point in the first half, when strong demand will continue to push prices up.
Source:Vanguard
