2024-02-26 14:24:00
© Reuters.
Investing.com – The contract has been trading in a very tight range lately, and Goldman Sachs (NYSE:) expects a $70-$90 per barrel range to persist for the foreseeable future, as oil price volatility declines to pre-Covid lows, despite… From the tensions surrounding the Red Sea tanker attacks.
The influential investment bank, in a note dated February 25, said that this subdued volatility reflects three main reasons despite the ongoing conflicts in the oil-rich Middle East.
First, the geopolitical risk premium remains modest, with the price of Brent crude rising by only $2 per barrel as a result of unrest in the Red Sea and .
Second, the pillars of OPEC’s range framework remain in place as higher spare capacity limits upside price risks, while OPEC limits downside risks.
Saudi Arabia’s decision not to increase its production capacity and the decline in the elasticity of US supply of shale oil indicate that Saudi Arabia has the will and means to support prices.
Finally, strong growth in non-OPEC supply is likely to keep pace with strong growth in global demand.
Analysts at Goldman Sachs said: “We still expect demand to grow by 1.5 million barrels per day in 2024, with a downgrade in China due to our weak immediate outlook but upgrades in India and the United States.”
“We still expect OPEC+ to extend the cuts until the second quarter of 2024, and only gradually and partially phase out the latest package starting in the third quarter of 2024.”
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