Baku, Azerbaijan, Jan.8
By Leman Zeynalova – Trend:
The forecasts of Goldman Sachs for a 3 and 6-month period for Brent are now $62.5 per barrel and $67.5 per barrel, down from $70 per barrel previously, but above current forwards.
The average forecasts are $62.5 per barrel for Brent and $55.5 per barrel for West Texas Intermediate (WTI), Goldman Sachs Group, Inc., a leading global investment banking, securities and investment management firm, told Trend.
The company’s 2020 forecast of $60 per barrel and $54.5 per barrel are unchanged.
“In essence, we are shifting our market anchor from spot Brent prices in 2018 - when low inventories and constrained supply left the market clearing off demand adjustments - back to deferred WTI prices like in 2015-17, as US production returns to being physically unconstrained,” said Goldman Sachs.
“We are lowering our 3-year WTI forward price forecast from $55 per barrel in 1Q19 to $50 per barrel from 2Q19 onwards.”
As new pipes come online, Goldman Sachs expects the WTI-Brent differential to return to $5.5 per barrel in the second half of 2019.
“Relative to this long-term Brent anchor, our supply and demand forecasts lead us to forecast the forward curve to return to backwardation on the combination of resilient demand growth, lower core-OPEC and Russia production, moderate declines in Iran/Venezuela and slowing US production growth in 1H19. Admittedly, this normalization in inventories will be gradual, given the weaker starting point of 2019 Balances,” said the company.
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