Goldman Sachs cuts its oil price forecast to $ 20 a barrel
12:47 - 3/18/2020
Goldman Sachs cut its forecast for the price of Brent crude in the second quarter by a third to $ 20 a barrel, expecting a record decline in global demand by 1.1 million barrels per day this year due to the implications of the Corona virus outbreak on economic growth.
At this level, the price of Brent crude will be at the lowest level since February 2002. Oil prices fell again on Wednesday as Brent traded near $ 28.50 a barrel by 0558 GMT.
"Such a decline will ... be consistent with the previous large downward trend in the markets in 1999, 2009 and 2016," the bank said in a note dated March 17.
The bank added that the damage caused by the virus may reach a peak in late March at eight million barrels per day, expecting a surplus in supplies of 3.9 million barrels per day and 5.7 million barrels per day in the first and second quarters, respectively.
The bank added that while global storage capacity, including the US strategic reserve, may be absorbed at about 1,100 million barrels, this surplus, "the speed of accumulation of future stocks will certainly overwhelm the ability to fill the stock."
But the bank added that on the other hand, the decline in supplies and the recovery of demand may lead to a deficit in the oil market of 1.5 million barrels per day by the fourth quarter, and kept its expectations for the price of Brent crude in the third and fourth quarters unchanged at 30 and 40 dollars per barrel, respectively.
Shale oil production is expected to decline 0.75 million barrels per day on an annual basis by the fourth quarter, with production of two high-cost producers, with the exception of the Organization of Petroleum Exporting Countries (OPEC), Russia and other shale oil producers, likely to decrease by 0.6 million barrels per day, on the basis of Annual in the same period. Ended / 25