Quick reactions from global banks came after the OPEC Plus decision to cut oil production by two million barrels, as Goldman Sachs raised its forecast for oil prices in the fourth quarter of 2022, to $110.
At the conclusion of their meeting yesterday, Wednesday, the members of OPEC + agreed to Production cut by 2 million barrels per day in NovemberAccording to the group’s statement. The OPEC + statement also stated that the “declaration of cooperation” would be extended until the end of 2023, with ministerial meetings to be held every 6 months. The OPEC + ministerial monitoring committee will meet every two months to follow up on market developments.
The Goldman Sachs oil team has been bullish for some time, as they raised their Q4 forecast by $10 to $110 a barrel.
“Brent crude will find its way to $100 a barrel faster than we previously expected” after the OPEC+ move, Morgan Stanley analysts said in a note.
They added that the cut threatens to tighten markets significantly, although many depend on how Russian oil production prices move once the EU embargo comes into effect.
Morgan Stanley raised its forecast for Brent crude to $100 for the first three months of 2023, while keeping its forecast unchanged for the next three quarters.
“All the developments we’ve seen on the supply side at this point pretty much set the stage for what we think will be higher prices at the end of this year,” Damien Corvalin, head of energy research at Goldman Sachs, told Bloomberg TV.
Analysts at UBS, including Giovanni Stonovo, said in a note that the oil market is expected to tighten further and the price of Brent crude will exceed $100 in the coming quarters.
He added, “The OPEC + cut will unite with the European ban on Russian crude imports, in conjunction with the increase in demand by switching from gas to oil this winter, which will put pressure on the market.”