Goldman Sachs trimmed its price expectation for Brent crude in 2024 by $10 a barrel to between $70 and $90, saying strong production from the US would moderate any upside in oil prices.
“We still look for rangebound prices and only moderate price volatility in 2024. Elevated spare capacity to handle tightening shocks should limit upside price moves,” its analysts said in a note dated December 17.
The investment bank now expects Brent to recover to a peak of $85 a barrel in June 2024 and to average $81-$80 in 2024/25 compared with $92 previously.
Brent was trading at about $77 at 5.26am GMT on Monday, down 20% from multi-month highs hit in September. US West Texas Intermediate (WTI) crude was about $72 a barrel.
Continued supply from non-Opec sources, led by the US, shows that several tailwinds to US production are likely to persist in 2024, Goldman Sachs added.
Analysts said they expect US Lower 48 crude output to reach 11.4-million barrels per day (bpd) in the fourth quarter of 2024, and hiked its US total liquids supply growth forecast for the year to 0.9-million bpd from 0.5-million earlier.
However, Opec’s decision to rein in supply, a recovery in China, restocking in the US and a modest recession risk should limit downside risk to oil prices, the bank noted.
“Saudi Arabia is unlikely to ‘flush’ the market in 2024,” Goldman analysts said, adding “we expect full extensions of the Opec+ cuts announced in April 2023 (1.7-million bpd) through 2025 and of the additional 2.2-million bpd package through [the second quarter of] 2024.”
“We adjust our Opec range trade to a short $70 put, long $80/$90 call spread option on Brent June 24, and still recommend long summer 2024 gasoline margins,” they added.
Reuters
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