Goldman Sachs said that with the surge in global gas prices, a colder winter in Europe and Asia could, in turn, boost demand for oil, driving a $5 per barrel upside risk to its fourth-quarter 2021 Brent price forecast of $80 a barrel.
A global surge in wholesale power and gas prices has prompted concerns of high winter energy bills and shortages, having already forced some energy supplies out of business in Britain.
A colder winter could lead to a 900,000 barrels per day (bpd) increase in oil demand, the Wall Street bank said in a note dated Sept. 19.
“The tightness in global gas supplies creates a clear and potentially meaningful bullish catalyst for the oil market this winter, larger than the downside risk to global oil demand from another Delta-like COVID wave,” Goldman added.
The investment bank said that for oil prices to cross the $80 a barrel threshold, prices at the Dutch TTF hub and JKM would have to trade at $23.5 and $25.5/mmBtu respectively.
Prices at the TTF hub and JKM are currently trading at $24/mmBtu and $25/mmBtu, respectively.
Brent crude futures were trading at $74.29 a barrel at 0844 GMT and U.S. West Texas Intermediate (WTI) crude futures were at $70.70 barrel.
Bank of America Global Research said recently it could bring forward its $100 per barrel oil price target to the next six months from mid-2022 if the winter is colder than usual, while Barclays expects low stocks in Europe and strong demand for LNG in Asia, suggesting higher gas prices are here to stay over winter months.