Oil prices continued their strong performance on Thursday due to the restricted supply caused by OPEC+'s production cuts and an optimistic outlook on China's demand and global growth prospects.
WTI crude futures surged more than 2% in intraday trading to $80.42, marking a new high since April 19. Brent crude broke through $84 a barrel for the first time since April. As of last Friday, oil prices had risen for four consecutive weeks.
Goldman Sachs Forecasts Brent Oil to Rise to $86 a Barrel by Year-End
Goldman Sachs' oil research chief, Daan Struyven, indicated that despite U.S. oil production's significant increase to 12.7 million barrels per day in the past year, the growth rate will significantly decelerate for the rest of the year, adding just 200 barrels per day. With a considerable supply deficit anticipated in the second half of the year and record demand in the oil market, Struyven expects oil prices to rise in the short term.
The latest data from Baker Hughes last week, which measures U.S. drilling activity and future production, showed a decrease of seven drilling rigs to 530, the lowest level since March 2022.
Goldman Sachs also noted that the G20 energy ministers' failure to reach a consensus on gradually reducing fossil fuels complicates the transition to clean energy. This indicates significant uncertainty in long-term oil demand, which investors will need to compensate for with a premium.
Bank of America Reiterates Brent Oil Target Price of $90 a Barrel by Early Next Year
Bank of America's Global Commodity Research Team reiterated its target price of $90 a barrel for Brent crude oil by early next year.
Bank of America identified the reasons for depressed oil prices: rising global interest rates have suppressed overall demand and curtailed oil consumption, causing speculators to maintain neutral or bearish positions in the oil market. However, this is set to change with oil prices expected to rise in the next few quarters.
Bank of America anticipates a significant tightening of the oil market within the next 18 months, with a substantial drop in global oil inventories. Further production restrictions from OPEC and Russia's consideration to reduce oil exports could exacerbate supply-demand imbalance. In addition, the U.S. will replenish previously released strategic oil reserves.
Various Wall Street Institutions Comment on Oil Prices
UBS analysts stated in a report, "We see an oil market supply shortage. We remain optimistic about the outlook for the crude oil market and expect Brent crude oil prices to rise to $85-90 in the next few months."
Pictet Bank analysts said, "While people generally expect demand to exceed supply for the rest of the year, so far, oil prices themselves have not sent a signal of this underlying trend."
Analysts at Phillip Nova, a Singapore brokerage, indicated in a report, "China's pledge on Monday to increase policy support for the economy has sparked market expectations for a recovery in oil demand from the world's largest crude importer."
On August 4, OPEC+'s principal ministers will review the market situation, which is expected to be a focal point for the crude oil market.
