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Goldman Sachs predicts record demand for crude oil

Oil Gas

Investment bank Goldman Sachs is anticipating crude oil prices to rise this year, as record demand triggers inventory draws.

Speaking on “Squawk Box Asia” on CNBC, the head of oil research at Goldman, Daan Struyven, said:

“We expect pretty sizable deficits in the second half with deficits of almost 2 million barrels per day in the third quarter as demand reaches an all-time high.”

He said that due to this, the bank was forecasting that the price of Brent crude will rise to $86 per barrel by the end of this year. While this is higher than the levels seen in recent months, it is some way off the $100+ prices that many analysts were predicting earlier in the year.

Struyven did note that US operators like Chevron and ExxonMobil, the makers of the Texaco and Mobil lubricant and coolant products, have considerably increased their oil production in the past 12 months. Nevertheless, he said it expected it to grow only slowly from the current 12.7 million barrels per day, pointing to the falling number of active rigs in the US:

“We expect US crude supply growth to slow down pretty significantly to a sequential pace of just 200 barrels per day from here.”

With the recent G20 meeting of energy ministers failing to agree a consensus for reducing the use of fossil fuels, Struyven said there was considerable uncertainty about the long-term demand for oil, and this was causing investors in the oil and gas sector to demand a premium as a result.

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