American multinational investment bank and financial services company Goldman Sachs in a new forecast expects Brent oil prices to reach $70 per barrel in the second quarter (Q2) of this year, up from the $60 it had previously predicted, and to $75 in the third quarter (Q3), up from $65.
“We believe this faster rebalancing during what was expected to be the dark days of winter will be followed by a widening deficit this spring as demand rebounds faster than supply, setting the stage for a tight physical market,” Reuters quoted Goldman as saying, in a note dated Sunday.
According to Reuters, the bank now expects global oil demand to reach 100 million barrels per day (bpd) by late July 2021 versus its previous expectation of August 2021.
Guyana lifted its first cargo for this year from the Liza Phase 1 Development earlier this month and could lift around 4 to 5 more for the remainder of 2021, each totaling approximately 1 million barrels of oil. If Goldman’s forecast of a $75 oil price by Q3 holds, the country will get around $75 million for each cargo exported towards the end of the year.
Meanwhile, oil prices rose on Monday as the slow return of U.S. crude output that was cut by frigid conditions raised concerns about supply just as demand rebounds.
Goldman expects the freeze in Texas to lead to a 1.5 million bpd global deficit this month and cut output by 0.2 million bpd in March due to infrastructure damage and missed completions, the Reuters report stated.
An agreement to hike production by the Organization of the Petroleum Exporting Countries and its allies in the upcoming March meeting will not be bearish for prices as supply is set to lag, Goldman said.
It expects a 0.5 million bpd increase in quotas in April, with Saudi Arabia reversing its unilateral 1 million bpd cut and continues to expect moderate exports from Iran this year.
“The key uncertainty for now is at which price level producers finally ramp-up activity… we are raising our marginal cost assumption by $5 per barrel to $60 per barrel Brent for the remainder of 2021,” Goldman said.
Last week, UBS raised their Brent price forecast to $68 per barrel for the second half of this year, Reuters said.