(Bloomberg) --
Goldman Sachs Group Inc. cut its oil-price forecasts and sees Brent reaching $100 a barrel by December instead of around the middle of the year.
The bank is still among the most bullish on Wall Street when it comes to commodities and believes the market has entered a supercycle. Yet it now predicts a supply surplus of 150,000 barrels a day this year, after lowering demand forecasts for major economies and pushing up production estimates for Russia and the US slightly.
“This adjustment reflects a modest softening to our 2023 balance,” Goldman analysts including Callum Bruce and Jeff Currie said in a note.
They say Brent will probably average $92 a barrel this year, less than their previous forecast of $98. The global benchmark has dipped almost 2% since the end of 2022 to $84.30 a barrel. High interest rates have weighed on economic growth and energy consumption, while investors are less concerned about a drastic drop in Russian exports due to sanctions.
The bank maintains that oil prices will be high in the long-term and says Brent will average $100 next year.
China's economic recovery — triggered by the ending of coronavirus lockdowns — will push crude markets into a deficit by June this year and “expose structural underinvestment,” Goldman said. The bank added that OPEC producers will likely raise output in the second half of 2023 to help balance supply and demand.
That optimism puts it at odds with the likes of Citigroup Inc., which says the market is well-supplied and that prices will probably fall another $10 a barrel by the end of 2023.
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