FX.co ★ Goldman Sachs predicts crude deficit

Commodity market analysts continue to discuss potential oil prices for 2024. Against the backdrop of geopolitical turmoil, analysts from Goldman Sachs Group are predicting a shortage of crude, even though current inventory data are noisy and mean-reverting. Analysts estimate that current reports on oil reserves indicate a risk of excessive supply. The issue of demand is much more complex. The present risks are neither driven by "a persistent drop in demand, nor by a persistent rise in non-OPEC supply," leading to a situation of instability and imbalance. Moreover, economists find it challenging to align their calculations when they have to operate almost blindly. Against this backdrop, Goldman Sachs Group expects a deficit of 1.1 million barrels per day in the fourth quarter of 2023, and a deficit of 0.8 million barrels per day in 2024. According to forecasts, Brent is expected to reach $100 per barrel by next June, with oil prices likely to stay in the $80-$105 range. Goldman Sachs Group bases its forecast on the calculations offered by the high-frequency global inventory tracker. Over the last five weeks, this indicator has not shown large inventory draws. As a result, the bank's analysts have proven more accurate than the majority, whose calculations were based on "supply-demand balance estimates." Goldman Sachs Group explains the potential deficit in the oil market by OPEC countries' contributions to rising oil prices. Many OPEC members were increasing their crude exports or reducing their inventories in domestic markets. Consequently, oil prices exceed the fair value calculated by the bank based on inventory statistics. Moreover, this introduces instability in calculations, making it difficult to forecast oil prices.