Strengthening global demand and China’s reopening may push oil prices above $100 per barrel this year, Oil Price reported on Tuesday, citing a recent forecast by Goldman Sachs.
The US investment bank expects Brent crude to trade at $105 per barrel by the fourth quarter of 2023 and says oil demand will surge by 2.7 million barrels per day (bpd) this year. However, in the second half of 2023 the market may return to a deficit, economists warned.
The forecast comes as China announced massive oil-import quotas after reopening its borders and giving permission to 44 private refiners to import 111.82 million metric tons of crude, Bloomberg reported, quoting traders familiar with the issue.
Oil prices surged by 4% on Monday on news about Asia’s biggest economy reopening, giving grounds for expectation that strengthening growth in global demand would allow the OPEC+ alliance to unwind its October production cut in the second half of the year.
However, Goldman Sachs said that if the market turns out to be softer, then the alliance “could stick to its October cuts or cut production even further, given its significant pricing power.”
Although economists warn that markets will be tight in the first quarter due to a downturn in many wealthy economies, the bank still expects what it calls a “new supercycle” in commodities, saying they look set to be the best-performing type of asset in 2023.
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