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Goldman pushes back timetable for $100 oil

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Investment bank Goldman Sachs has downgraded its forecast for oil prices this year, with it now no longer expecting crude oil prices to reach $100 per barrel until December this year. It had previously predicted a price of $105 by the fourth quarter.

The bank also raised its forecast for global oil supply, with the most significant increases being for Kazakhstan, Russia and the United States, where shale operators like ExxonMobil, the maker of Mobil grease and lubricant products, have been steadily increasing production in areas like the Permian Basin.

Goldman has now reduced its price forecast for Brent crude this year from $98 per barrel to $92, with next year’s forecast also reduced from $105 to $100. In a note reported by Reuters, the investment bank said:

“This adjustment reflects a modest softening to our 2023 balance…On the demand side, downgrades in Europe, the United States, and Asia excluding China — reflecting a warm winter and the loss of distillate-based gas-to-oil switching — offset much of the China upgrade.”

The bank essentially anticipates there to be continuing spare capacities this year, resulting in a modest surplus of 150,000 barrels per day (bpd) that will keep long-dated prices relatively low. Chinese demand for crude oil is also expected to rise by 1.1 million bpd this year, however, and Goldman predicts this will lead to a supply deficit in the middle of the year. Nevertheless, it also believes that an upward adjustment will now take longer because long-dated prices will be starting at a lower point.

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