Goldman Sachs upped its already bullish forecast on Sunday, calling for Brent crude to hit $ 90 a barrel by year-end. That’s up from its previous call for $ 80.
The Bank of Wall Street expects US crude to hit $ 87 a barrel, down from $ 77 previously.
The company said the recovery in global demand for the Delta variant has been “even faster than our above consensus forecast” and global supply is “below our below consensus forecast.”
Brent crude, the global benchmark, jumped 1.5% to $ 79.25 a barrel on Monday. This leaves Brent on track for his highest close since October 2018.
US crude rose 2% on Monday to settle at $ 75.45 a barrel. This is the highest close since October 3, 2018. This is the first time that oil has ended above $ 75 a barrel since mid-July.
The latest gains come on top of the remarkable recovery since the start of Covid, when U.S. crude slumped below zero for the first time in its history. Oil hit a negative low of $ 40 a barrel in April 2020, about $ 115 below current levels.
The pandemic has forced U.S. oil companies and OPEC to drastically cut production – and much of that supply remains offline.
Goldman Sachs has stated that the current supply and demand deficit “will not be reversed in the coming months, in our view, as its magnitude will exceed both OPEC + ‘s willingness and ability to climb. in power”.
Meanwhile, the return of US shale oil “has only just begun,” Goldman Sachs noted.
U.S. oil supplies were hit by Hurricane Ida, which took Gulf of Mexico production offline for an extended period. Goldman Sachs said the storm “is expected to prove to be the most bullish hurricane in US history.”
Goldman Sachs said it would set the stage for oil inventories to hit their lowest level since 2013.