Strategists at the New York-based investment bank see Brent crude averaging US$110 per barrel next year From jefflagerquist
Brent crude was down 0.18 per cent to US$83.45 as at 1:09 p.m. ET on Monday, largely erasing 2022 gains fuelled by Russia's war in Ukraine. Meanwhile, U.S. benchmark West Texas Intermediate gained 1.25 per cent to US$77.23 per barrel, after trading near its lowest level of the year.
Goldman Sachs predicts a strong U.S. dollar and weaker demand expectations will remain a "powerful headwind to prices." However, the bank says the supply situation will "inevitably" require "much higher prices," due to lack of investment in the industry, as well as low spare capacity and inventories.wide-ranging outlook for next year
. "We reiterate our bullish price view, and expect Brent crude oil prices to average US$110 per barrel in 2023." Goldman Sachs says seasonal demand from heating is likely to pick up as temperatures drop during the winter months. The strategists also note the impact of so-called gas-to-oil switching, where certain utilities and industrial consumers swap more expensive natural gas for refined oil products like diesel or gasoline.
"At the same time, we believe the EU embargo on Russian oil will demand an unachievable redirection of flows, causing Russian production to fall by 0.6 million barrels per day, at the same time as OPEC+ has agreed to an effective cut of 1.2 million barrels per day," the strategists wrote.They add that it would also take a "hard landing" for the U.S. economy to justify sustained lower prices.
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