Focus on the BIG picture.

All-Time High Oil Demand: Goldman Sachs Forecasts Imminent Deficits and Price Surge

Economic uncertainty and reduced rig count in the US drive warnings of a sharp rise in oil prices amid record-breaking demand.
Investment banking titan, Goldman Sachs, has issued a warning of impending record-breaking demand in the global oil market. This surge, accompanied by considerable deficits and escalated crude oil prices, is attributed to the diminishing rig count in the United States and widespread uncertainty about long-term oil demand.

In an interview on CNBC's "Squawk Box Asia" on Monday, Daan Struyven, Goldman's Head of Oil Research, detailed the bank's prediction of "pretty sizable deficits" in the second half of the year. As per his explanation, these deficits are anticipated due to the demand for oil reaching unprecedented highs.

Goldman Sachs anticipates that the price of Brent crude, a key benchmark, will jump from its current value just north of $80 per barrel to an estimated $86 per barrel by the end of the year.

Struyven clarified that while US crude production saw significant increases over the previous year, the pace of this growth is predicted to taper off for the remainder of 2023. The cause? A decrease in the number of operational rigs. Reports from last week showed that the US oil rig count has fallen to its lowest point since March 2022.

Struyven also pointed out the failure of the G20 energy ministers to reach a unified agreement on phasing out fossil fuels during last week's summit in India. This deadlock further illustrates the "very substantial" uncertainty clouding the future of oil demand.

The International Energy Agency (IEA), on the other hand, anticipates the oil markets to tighten in the year's second half. In its recent report, the agency cut back its global oil demand growth projections. However, IEA's Director Fatih Birol acknowledged these projections could be amended upward, depending on China and other countries' economic growth.

Oil prices experienced a roller-coaster ride for much of 2022, partly due to Western sanctions on Russia, a significant producer. However, as the year neared its end, prices experienced a sharp decline, thanks to a milder winter in Europe and a slowdown in global economic activity.

In a move to balance prices, OPEC+, consisting of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, agreed in October to reduce its output by approximately 2% of world demand from November until the end of 2023. Further cuts were agreed upon later to maintain equilibrium in prices.

As of Monday, Brent crude futures had reached over $82 per barrel, and West Texas Intermediate (WTI) futures in the US were trading above $78 per barrel. With these trends and the forecast from Goldman Sachs, the oil industry is bracing itself for an eventful near future.
Newsletter

Related Articles

0:00
0:00
Close
Musk Dismisses Biden's 'Election Buying' Claims
Russia Accuses Ukraine of Using Chemical Weapons
Ursula von der Leyen Wins Second Term as European Commission President
Biden Cancels $1.2 Billion in Student Debt Ahead of Election
OpenAI Launches Cost-Efficient AI Model GPT-4o Mini
US Business Tycoon J Michael Cline Dies at 64
Barack Obama Urges Joe Biden to Rethink Presidential Re-election Bid
Fake Ear Bandages: New Trend at Republican National Convention
Trump's Dominance Over Republican Party Raises Concerns
Police Officer Injured in Attack in Central Paris
Hulk Hogan absolutely tore it up at the RNC.
Paris is being "cleansed" of migrants and homeless people ahead of the Olympics.
Campaigners Urge UK Government to Block Shein's London IPO
UK Labour Government to Regulate Powerful AI Models
Record Heat Temperatures in Ukraine Amid Power Crisis
UK Government Plans to Remove 92 Hereditary Peers from House of Lords
Russia and Ukraine Exchange 190 Prisoners of War
DHS Investigates Secret Service's Security at Trump Rally
Vivek Ramaswamy Champions Revival of the 'American Dream'
Russia Open to Dialogue with Any US Leader
Biden Considers Dropping Election Bid If Medical Condition Arises
Japan to Allocate $3.3 Billion to Ukraine Using Frozen Russian Assets
EU Parliament Condemns Hungarian PM's Russia Visit
Kremlin Criticizes EU Rejection of Orban’s Ukraine Peace Proposal
Elon Musk Relocates SpaceX and X Headquarters to Texas
Google and Microsoft Now Consume More Power Than Several Large Countries
Trump Supports Powell to Complete Fed Term if Re-Elected
Mark Hamill Criticized for Mocking Trump's Ear Bandage
Donald Trump Selects JD Vance as Vice President Candidate for 2024
Secret Service Criticized for Lack of Sniper Protection During Trump Shooting
Elon Musk Relocates SpaceX and X Out of California
Minnesota Court Rules Law Banning Guns for 18-20 Year-Olds Unconstitutional
US Senator Robert Menendez Found Guilty of Corruption
Deep Concerns about Political Violence as US Approaches Election Day
Elon Musk to Move Companies Out of California Over Transgender Law
Increased Security for Trump After Assassination Threat
Biden Pledges Reelection Campaign and Criticizes Trump's Policies
BlackRock Connection to Failed Attempt on Trump's Life Revealed
Trump's Classified Documents Case Dismissed
Fact-Check: Did 'The Simpsons' Predict Trump Assassination Attempt?
JD Vance Calls China the Biggest Threat in Early VP Comments
Donald Trump Picks JD Vance as Vice President for 2024 Election
Trump Assassination Attempt Thwarted by Secret Service Sniper
Failed Assassination Attempt on Trump by Former Math Whiz
New AI Chipset Set to Revolutionize ChatGPT
JD Vance Chosen as Donald Trump's Vice President Pick
Trump Triumphs Despite Legal and Political Challenges
Trump Media Shares Surge Following Re-Election Bid Boost
OpenAI's Secret AI Development Project 'Strawberry'
Trump Proposes Mental Test for Presidential Candidates
×