Goldman Sachs had another bullish message for oil markets this week, saying in a note that it expected global oil demand to recover to pre-pandemic levels of 100 million bpd by August this year.
According to Goldman, the oil market was in a deficit of 2.3 million bpd in the final quarter of 2020. With supply still tight at the start of 2021, the immediate future for prices is bright despite expectations for a slow demand recovery.
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At the end of 2020, Goldman Sachs’s commodities chief Jeffrey Currie said he expected Brent crude to rise to $65 a barrel this year, citing structural underinvestment in the industry.
All markets except wheat, Currie noted in late December, are in a deficit, and this is certainly bullish for prices. But what he calls structural underinvestment also has its part to play for the future of prices. This is particularly true for oil, where the underinvestment is not just motivated by the price rout, but by the shift towards renewable energy investments.
According to Goldman, the oil market was in a deficit of 2.3 million bpd in the final quarter of 2020. With supply still tight at the start of 2021, the immediate future for prices is bright despite expectations for a slow demand recovery.
I guess GS could be talking their own book and I could be guility of confirmation bias but this is the exact scenario I have been discussing for months. Many of the oil stocks in my portfolio have been breaking higher recently.
At $65 a barrel which they are also saying many companies will be cashflowing like crazy.