A truck passes pump pits at the Belridge oilfield on November 3, 2021 near McKittrick, California.
Mario Tama | Getty Images News | beautiful pictures
Goldman Sachs predicts oil demand will hit a new high in 2022 and again in 2023.
Damien Courvalin, the investment bank’s head of energy research, also said Friday that oil at $100 a barrel is a possibility.
Oil demand was already at record levels prior to the launch of the latest omicron variant, and further, air travel demand will continue to recover, he said.
“We’ve had record high demand ahead of this latest variant, and you’re adding higher jet demand and the global economy is still growing,” Courvalin said during a press conference on Energy outlook with reporters on Friday. “You see we’re going to average a new record high demand in 2022 and again, in 2023.”
Both international standard Brent crude oil and US crude oil Prices have spiked above $80 in recent months as post-pandemic demand outstrips supply. Rising natural gas prices have also caused crises around the world, most notably in Europe.
However, the omicron variant has dampened sentiment, pushing the price back just above $70 in recent weeks.
Meanwhile, Courvalin hopes the restrictions that are affecting air travel will ease.
Air travel has recovered slowly, partly due to Asia, he said. “Until recently, countries like Australia, New Zealand Singapore, have been very active in restricting international transfers. That has been relaxed,” he said.
“We’ll have to wait for this wave to pass but it shows that international tourism will recover further next year,” he said, predicting that oil prices will be at $85 per barrel in 2022. with a possible upside risk to $5. up to $10 higher.
Courvalin said he would not rule out the possibility of oil hitting $100, and that there are “two paths” that could lead to that.
The first is that costs increase as oil companies ramp up production. “There is inflation, everywhere else in the economy, and eventually inflation in the oil service,” he said.
Another possibility is if oil supplies cannot meet demand as global economies reopen post-pandemic.
Courvalin said oil prices could reach as high as $110 as demand hits to slow the market. That is “quite easy to imagine,” he added.
There have been concerns about high oil prices bring the market to demand destruction, which occurs when demand declines over a short period of time, caused by a period of persistently high prices.
OPEC+ – which includes the Organization of the Petroleum Exporting Countries and its allies including Russia – said it could meet earlier than scheduled on January 4 if changes in the outlook needs to be reconsidered, Reuters reported. OPEC+ plans to add another 400,000 bpd of supply in January, according to Reuters.
https://www.cnbc.com/2021/12/17/oil-investing-goldman-sachs-on-energy-outlook-oil-at-100-possible.html Goldman Sachs on energy outlook, oil price could hit $100