A healthy growth in consumer spending and solid summer demand will push the oil market to a 1.3 million barrels per day (bpd) deficit in the third quarter and lift benchmark Brent prices to $86 a barrel, Goldman Sachs said.
The bank cut its 2024 oil demand growth forecast by 0.2 million bpd to 1.25 million bpd, but maintained that it expects demand growth to be robust mainly due to jet fuel recovery.
The modest China-driven demand growth downgrade for 2024 offsets a 0.1 million bpd cut to non-OPEC supply and an assumption of higher U.S. strategic petroleum reserve purchases, the bank said in a note on Sunday.
Brent crude futures and U.S. West Texas Intermediate crude futures were trading around $79.85 and $75.74 a barrel, respectively, by 0448 GMT on Monday.
The Wall Street bank sees Brent averaging at $84 and WTI at $79 a barrel in 2024. It continues to expect Brent in $75-$90 range, and kept its 2025 average price forecast unchanged at $82 per barrel.
“We still see a $90/bbl ceiling in our base case of no geopolitical supply hits, and the risks to our $75-$90 range as modestly to the downside,” Goldman said.
The bank’s analysts said they see a $75/bbl floor under Brent as physical demand for oil, including from China and the U.S. SPR, tends to rise when prices fall.
Additionally, OPEC’s agreement on new production baselines through 2026 signals stronger cohesion, further reducing the likelihood of much lower prices, Goldman said, noting that financial demand for oil is likely to rise substantially if currently very low speculative positioning normalizes.
“A normalization over 6 months in crude and products net managed money positioning to its average since 2022 would raise financial demand for oil by 1.5 million bpd.”
(Reporting by Swati Verma in Bengaluru; Editing by Varun H K)