Goldman Sachs said late Sunday that weak oil demand in China and Europe poses a major downside risk to its fourth-quarter Brent crude forecast of $90 a barrel and WTI forecast of $83, although Middle East supply disruptions could still push prices higher.
Here are a few details:
* April retail sales data from China and Western Europe suggest roughly 2 million barrels per day of downside risk to Goldman Sachs’ already conservative April oil demand estimates, potentially reducing its Brent price forecast by about $10 per barrel.
* Weak demand for petrochemical feedstock across Asia is reflected in lower utilization rates at ethylene plants, softer chemical-sector industrial production in China and Japan, GS said, and flagged a year-on-year decline of 150,000 barrels per day in India’s naphtha and LPG demand during April.
* The brokerage said indicators for road fuel consumption remain weak in China and several European countries, although demand appears resilient in the U.S. and India.
* The market has become more optimistic on the prospects for a potential long-lasting U.S.-Iran ceasefire, leading to reduced investor positioning and continued physical destocking ahead of the anticipated reopening of the Strait of Hormuz.
(Reporting by Noel John in Bengaluru; Editing by Sherry Jacob-Phillips)