Oil prices experienced a boost on Monday despite OPEC+ agreeing to increase output on Sunday. Brent crude rallied 0.9 per cent to reach $US66.06 per barrel, while West Texas Intermediate also saw a 0.9 per cent increase, settling at $US62.40. The output agreement prompted speculation about the future direction of oil prices, yet Goldman Sachs has maintained its previous forecasts.
Goldman Sachs, a leading global investment bank, provides a range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and individuals. Their analysts have chosen to keep their Brent crude forecast at $US56 per barrel by the end of the year, with light crude projected to reach $US52. This decision comes even after the latest OPEC+ agreement to boost production.
The bank’s rationale reflects a balance between slightly lower spot prices versus long-dated prices. Goldman Sachs analysts cited the offset by slightly faster OECD stock builds and a slightly higher long-dated prices on reduced spare capacity as the reason to hold their price forecasts unchanged, according to a note issued by the firm.
The unchanged forecast suggests that Goldman Sachs anticipates the market will effectively absorb the increased output without significant downward pressure on prices, at least in the short term. Market participants will be closely monitoring inventory levels and spare capacity to assess the accuracy of these forecasts.
