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Oil prices Goldman Sachs analysts said in a report that “robust summer demand” is expected to help oil prices rise to about $86 a barrel as the driving season heats up.
Forecasts show Brent crude prices will rise to $86 a barrel in the third quarter of this year, up about 7.5% from levels when they surpassed $80 a barrel in afternoon trading on Wednesday.
Goldman’s analysis left its forecast range for Brent crude prices at $75 to $90 per barrel.
“We expect the market to move into a significant deficit in the third quarter due to healthy consumer behavior and solid summer demand for transportation and cooling,” Daan Struyven, managing director and head of oil research at Goldman Sachs, wrote in the report.
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Oil prices are expected to rise, according to a new forecast from analysts at Goldman Sachs. (J. David Ake/Getty Images/Getty Images)
Oil prices have now fallen from their 2024 highs after briefly hitting $91 a barrel in early April. Brent crude prices have since fallen, staying above $80 for most of May before dropping to the low $70s in the first week of June.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| GS | Goldman Sachs Group | 444.27 | -9.28 | -2.05% |
The oil price swings came after the Organization of the Petroleum Exporting Countries (OPEC) and the broader OPEC+ coalition announced they would maintain overall cuts in oil production until 2025, while additional voluntary cuts of 2.2 million barrels per day are due to be lifted from October.
“We still see a floor for Brent crude oil prices at $75/bbl. First, physical demand for crude oil, including SPR from China and the US, is on track. [Strategic Petroleum Reserve]”When prices fall, rates tend to rise,” the analysts wrote.
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The Biden administration has reduced the Strategic Petroleum Reserve by 180 million barrels, bringing it to its lowest level since 1983. (Luke Charette/Bloomberg via Getty Images/Getty Images)
The Energy Department is in the process of replenishing the SPR. The Biden administration has cut the SPR by 180 million barrels in 2022 to its lowest level since 1983 in a bid to lower gasoline prices for inflation-stricken consumers and stabilize energy markets roiled by Russia’s invasion of Ukraine.
High oil prices last year delayed the Biden administration’s plans to buy crude to replenish stockpiles when prices were relatively low, but the plans are beginning to move forward as prices have stabilized.
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Energy Secretary Jennifer Granholm said the Biden administration may accelerate plans to replenish the Strategic Petroleum Reserve later this year. (Yi-Ching Li/Houston Chronicle via Getty Images/Getty Images)
The Department of Energy announced last week that it had invited two new bids for deliveries of a total of 6 million barrels of oil to SPR’s Bayou Choctaw facility between September and December. The department said it was aiming to procure the oil at a price below $79 a barrel.
DOE also provided an update on its buyback efforts, writing, “To date, DOE has purchased a total of 38.6 million barrels of oil at an average price of $77 per barrel for delivery to the Big Hill SPR site and has additionally accelerated exchange returns of approximately 4 million barrels pursuant to a strategy to replenish the SPR.”
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Several of the SPR facilities, located in four underground salt caverns in Texas and Louisiana, undergo routine maintenance to extend the facility’s life.
“We have all four plants on track to be back online by the end of the year, so the pace could pick up depending on the market,” Energy Secretary Jennifer Granholm said in an interview with Reuters.
Reuters contributed to this report.
