Goldman Sachs expects a surplus in the oil market early next year

Goldman Sachs cut its oil price forecast for 2023, anticipating a market surplus early next year, mitigating the risk of a winter price hike.

It lowered its forecast for the price of Brent crude oil for the first and second quarters of 2023 to $90 and $95 a barrel, from $115 and $105 a barrel, respectively.

The bank said the risk of a rise in oil prices this winter is lower with China’s consumption lower than expected in earlier, Russia’s exports near pre-war levels and production problems in Kazakhstan and Nigeria easing, according to Reuters.

Goldman Sachs expects the oil market to close out the quarter in course with a surplus of 1.6 million barrels per day and that the seasonal decline in demand will result in a surplus of 1.3 million barrels per day in the first quarter of next year.

Bank expects global demand to grow by two million bpd in 2023 as anti-Corona restrictions are lifted in China and the resumption of international travel.

For the full year 2023, Goldman Sachs said it expects Brent to reach a media of $98 a barrel and WTI at $92 a barrel, in down from the previous forecast of $110 for Brent and $105 for WTI.

Over the last two quarters of next year, Goldman Sachs said it expects Brent crude to rise to between $105 and $105 a barrel, which will remain lower than its earlier forecast of $110 a barrel.

He said he expects prices to rise in 2024, with Brent crude at one media of $105 a barrel and WTI at $99 a barrel.