Oil prices could potentially rise as much as 13 percent from current levels, though the rally may prove fleeting, according to Goldman Sachs Group Inc.
Top OPEC member Saudi Arabia is cutting output faster than U.S. shale drillers can fill the gap, leaving a void in the market that may push global benchmark Brent crude to $70-$75 a barrel in the near future, bank analysts led by Jeffrey Currie said in a note. At the same time, supply disruptions in Venezuela are likely to accelerate in coming months, they wrote.
"The oil market will likely continue to tighten significantly this March and April,” Currie said. “While prices could easily trade in a $70-$75 a barrel trading range, we believe such an environment would likely prove fleeting,” he said, reaffirming Goldman’s forecast for Brent to end the year at $60.
Brent has rallied 23 percent this year after a collapse of 35 percent in the last quarter of 2018 as the Saudis spearheaded a plan by the Organization of Petroleum Exporting Countries and its allies to curb production. Signs the U.S. and China are moving closer to a trade deal have improved the demand outlook, with President Donald Trump saying over the weekend he’ll extend a deadline to raise tariffs on Chinese goods.
Saudi Arabia is guiding to March production around 500,000 barrels a day lower than its own quota, Currie said in the Feb. 25 note. At least 100,000 barrels a day of Venezuelan exports have been lost, and this could rise to a daily 200,000 to 300,000 barrels in coming months if there’s no political resolution.free article limit.
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