Goldman Sachs Group has softened its bullish outlook for oil this year, nudging its forecasts down from $100 a barrel amid apprehensions of a wider banking crisis impacting growth potentials.
The move also follows worries over the potential for recession outweighs a surge in demand from China.
The bank’s analysts now see Brent reaching $94 a barrel for the 12 months ahead, and $97 a barrel in the second half of 2024, versus $100 a barrel previously.
“Oil prices have plunged despite the China demand boom given banking stress, recession fears, and an exodus of investor flows,” Goldman Sachs said in a March 18 note, Bloomberg reported. “Historically, after such scarring events, positioning and prices recover only gradually, especially long-dated prices,” the report said.
Global markets have been roiled this week as turmoil at Credit Suisse Group AG triggered panic across markets.
Oil has slumped to a 15-month low, with Brent dropping 12 percent this week to below $73 a barrel.
Following the decline in prices, Goldman Sachs now expects OPEC producers to only increase output in the third quarter of 2024, versus in the second half of 2023 which Goldman had estimated before the price rout.
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