Last week, the investment bank said that a colder winter and soaring gas prices globally could lead to higher-than-expected oil prices at the end of this year, with the potential for oil hitting $85 per barrel in the 4th quarter.
A week ago, Goldman, which had a price forecast of $80 a barrel oil for the last quarter of 2021, believed that the natural gas crunch combined with a colder-than-usual winter in Europe and Asia could pose an upside risk of $5 a barrel to its Q4 price projection.
With the diminishing impact of the Delta variant on demand and the upside risk from surging global energy prices, Goldman is now raising its year-end oil price forecast to $90 per barrel.
Goldman analysts wrote in a note dated Sunday and carried by Reuters:
- While we have long held a bullish oil view, the current global supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts
On the other hand, the global gas shortage ahead of the winter will boost demand for oil-fired electricity generation, the investment bank said.
Goldman Sachs’ Jeff Currie Brent said last week that oil could reach $90 per barrel if the weather in the northern hemisphere turns out to be colder than normal this winter.