By Senad Karaahmetovic
Goldman Sachs Head of Energy Research & Senior Commodity Strategist, Damien Courvalin, slashed the bank’s oil price forecasts despite saying the market remains "critically tight" on supply.
Crude oil prices are down over 35% since mid-June amid rising growth concerns. Moreover, the strong USD is also hurting oil prices with the dollar index (DXY) sitting at a 20-year high.
Despite slashing the 2023 forecast lower by $17.5/bbl on average, Courvalin remains bullish on oil prices.
"The structural bullish supply set-up - due to the lack of investment, low spare capacity and inventories - has only grown stronger, inevitably requiring much higher prices," he told clients in a client note.
JPMorgan told clients yesterday that it still expects oil prices to return to $100/bbl in Q4 despite mounting growth concerns. Both JPMorgan strategists and Courvalin see the Russian factor as one of the catalysts that could send oil prices higher.
"We continue to expect that Russian supply will decline into year-end when the EU embargo kicks-in alongside the end of the globally-coordinated SPR release. Based on these updated views, we still expect a seasonally adjusted global oil market deficit in 4Q22 and in 2023, taking account of builds required for demand growth and for the redirection of Russian oil," the GS strategist added.
Crude oil prices are up 2% today as the dollar takes a pause following a strong rally.