Goldman Sachs on Sept. 27 cut its 2023 oil price forecast due to expectations of weaker demand and a stronger U.S. dollar, but said the ongoing global supply disappointments only reinforced its long-term bullish outlook.
Goldman’s commodities research division lowered the forecast for next year by $17.5/bbl on average, even as it saw a seasonally adjusted global oil market deficit in the fourth quarter of 2022 and in 2023.
It revised its oil price forecast lower by $19 per barrel on average for the period stretching from the fourth quarter of 2022 to the fourth quarter of 2023 and sees global oil demand growing in 2023 by 2 million bbl/d at current prices, versus a previous forecast of 2.5 million bbl/d, according to a research note issued by the investment bank.
“Even with a cautious growth outlook ... the oil market remains critically tight, with still near-record low inventories and OPEC spare capacity and with supply soon set to turn supportive once again between the end of the U.S. SPR (Strategic Petroleum Reserve) sale and the expected decline in Russian production later this year,” the note said.
The short-term path for oil prices is likely to remain volatile, Goldman said, adding that a sharply appreciating dollar and lower demand expectations will continue to put downward pressure on oil for the rest of this year.
“While it may be surprising that oil is pricing such low growth expectations, this reflects the outsized exodus of investors, forced away by the extreme price volatility this spring,” it said.
It would take an economic hard landing and a contraction in global GDP growth to justify sustained lower prices, the note said.
Oil prices, which touched a nine-month low on Sept. 26, were up more than 2% on the back of supply curbs in the U.S. Gulf of Mexico due to Hurricane Ian and a slightly weaker dollar.
Goldman does not expect OPEC to increase its production quotas this year and sees the oil exporting group stabilizing output near current levels through 2023.
Recommended Reading
Crackin’ It at Kraken: Inside the Bakken’s Ramped-up Private E&P
2024-07-24 - Kayne Anderson-backed Kraken Resources is producing more than 80,000 boe/d today and has a new Fitch Ratings credit score to take to the M&A bank.
CNOOC Encounters High Yield Well in Beibu Gulf
2024-07-23 - CNOOC’s well was tested to produce over 1,000 cu. m/d of oil equivalent, making it the first well of such productivity in the Wushi Sag area.
Permian Basin Coalition Highlights Philanthropic Investments
2024-07-23 - Since 2019, the Permian Strategic Partnership has doubled its membership and used philanthropic investments to generate more than $1.5 billion in community support and collaborative investment.
E&P Highlights: July 22, 2024
2024-07-22 - Here's a roundup of the latest E&P headlines, with LLOG acquiring 41 blocks in the Gulf of Mexico and Saipem securing $500 million in contracts from Saudi Aramco.
Comet Ridge Awarded Mahalo Far East Extension for 6-year Term
2024-07-22 - Comet Ridge was awarded 100% ownership and operator of Australia’s Mahalo Far East Extension for an initial term of 6 years.