Goldman Sachs on Tuesday said it expects further moderation in the still-elevated geopolitical risk premium of $5-10 per barrel for crude oil in the coming months, and maintained its range-bound view, with a $90 per barrel ceiling on Brent.
Oil prices slipped on Tuesday, a day after touching their lowest levels in more than three weeks following a perceived de-escalation in the Israel-Iran conflict as Iran played down a reported Israeli attack on its soil.
The moderately bearish fundamentals also support a $90 per barrel Brent ceiling, Goldman analysts said in note, citing a build in landed crude inventories over the past month as crude oil on water unloads on land.
“Inventories are rising in our tracking of OECD landed stocks—a key driver of oil prices—as large prior builds of oil on water (partly as a result of Red Sea rerouting) are now unloading on land, reducing physical tightness.”
Goldman also noted a rise in the U.S. rig count to seven-month highs last week, and said its China demand nowcast decreased by 0.2 million barrels per day this week on lower refinery runs.
(Reporting by Daksh Grover and Swati Verma in Bengaluru; Editing by Leslie Adler)