Goldman Sachs remains bullish on the prospects of oil throughout the rest of the year forecasting global oil demand to have its biggest jump ever over the next six months.
The bank said Thursday that it is keeping its bullish forecast for oil prices this summer. Goldman Sachs expects the high demand for land, sea and air travel to lift up oil prices. The bank said the accelerated vaccinations in Europe, the U.S., and the rest of the world will result in an unprecedented demand for the commodity.
"[The aforementioned factors] will result in the biggest jump in oil demand ever, a 5.2 million barrels per day (bpd) rise over the next six months," Goldman Sachs said in a note to clients.
Goldman Sachs previously forecasted that oil prices may surge to $80 per barrel this summer. The bank has not revised the forecast and it remains confident that prices will hit its estimates.
"The magnitude of the coming change in the volume of demand, a change which supply cannot match, must not be understated," the bank said.
In a note to investors published earlier in the month, Goldman Sachs said it expected the strong demand to force OPEC+, the Organization of the Petroleum Exporting Countries and its allies, to increase its production capacity by an additional two million barrels per day by the third quarter. The increase expected is on top of the two million barrels per day that the alliance and Saudi Arabia had decided to restore by May.
In an earlier note, Goldman Sachs said oil inventories globally should normalize by the fall of 2021. The bank has not revised that prediction even with the recent surge in COVID-19 cases in India, which has somewhat clouded some investment bank's demand outlook for oil.
Goldman Sachs said Thursday that it has already taken into account the recent rise in COVID-19 cases in India and the commodity market prospects still remain unchanged.
The bank's outlook towards the commodity had remained bullish even after the massive sell-off in oil in mid-March. During that time, the bank said the sell-off was a "big breather" and a buying opportunity for investors.
