On Monday, Goldman Sachs estimated that the rally of oil prices would run off steam in the next few weeks as the prospect of future demand is still unclear and there is still an overhang in the inventory.
The bank expected Brent crude oil prices to hit USD35/barrel in the near future, way below the USD43/barrel on Monday. The Monday level was the highest in three months, achieved on the back of the OPEC+ agreement to prolong the output cut until the end-July. Meanwhile, on Tuesday, Brent was traded at around USD41/barrel.
Goldman said that the rebound was supported by a macro risk-on backdrop and a policy-induced Chinese crude import binge. However, fundamentals are turning bearish, and combined with demand expectations are only gradually getting up, the rebound outlook is still uncertain.
Going forward, Goldman predicted supplies to rise on the back of US shale and Libyan oil production coming back online. The deficit would be around 1.2 million bpd, compared to the prior forecast of 2 million bpd this month.
For 2020, Goldman increased its forecast for Brent to USD40.40/barrel from the previous USD35.60/barrel due to the positive sentiment on the restarting economies all over the world.
Estimation on WTI also raised to USD36/barrel this year, from USD33.10/barrrel prediction before.
