GS expects surplus in oil market in early 2023, lowers its price ‎forecast

Goldman Sachs cut its oil price forecast for 2023, saying it expects a market surplus early next year, mitigating the risk of a winter price rally.

According to “Reuters”, the bank reduced in a note dated Tuesday its forecast for Brent crude prices for the first and second quarters of 2023 to 90 and 95 dollars a barrel from 115 and 105 dollars a barrel, respectively.

The bank said that the risks of a rise in oil prices this winter are less, with China’s consumption declining compared to what was previously expected, Russia’s exports to levels close to those recorded before the war, and the decline in production problems in Kazakhstan and Nigeria.

Goldman Sachs expects that the oil market will end the current quarter with a surplus of 1.6 million barrels per day, and that the seasonal decline in demand will result in a surplus of 1.3 million barrels per day in the first quarter of next year.

The bank expects global demand to grow by two million barrels per day in 2023, with the lifting of anti-Corona restrictions in China and the recovery of international travel.

For the full year 2023, Goldman Sachs said it expects Brent to average $98 a barrel and WTI at $92 a barrel, down from its previous forecast of $110 for Brent and $105 for WTI.

In the last two quarters of next year, Goldman Sachs said that it expects Brent crude to rise between one hundred and $105 per barrel, which will remain lower than its previous forecast at $110 per barrel.

He said he expected prices to rise in 2024, bringing the average price of Brent crude to $105 per barrel and WTI to $99 per barrel.

Brent crude prices have fallen nearly 6 percent so far in the current quarter. It has fallen by more than 40 percent from the peak recorded in March at $139 a barrel.