Goldman Sachs has raised its forecast for crude oil prices this year, with supply hit by the “shock and awe” implementation of OPEC-led output cuts and by US sanctions on Iran and Venezuela and unrest in Libya.
The investment bank said in a recent note that it now expects benchmark Brent crude prices to average $66 per barrel in 2019, compared with its previous estimate of $62.50.
It sees US crude oil averaging $59.50 per barrel, up from its last forecast of $55.50.
Oil prices hit their highest in five months on Tuesday, with Brent marking $71.34 per barrel and US crude reaching $64.77 per barrel.
Crude markets have tightened this year as the United States imposed sanctions on oil exporters Iran and Venezuela while the producer club of the Organization of the Petroleum Exporting Countries (OPEC) has been withholding supply to prop up prices.
Goldman added that it expected the Brent forward curve to shift further into backwardation, a situation where contracts for future delivery are cheaper than spot supplies. Backwardation indicates a tighter market.
That comes as Goldman expects the global oil market to remain in a supply-deficit of about 0.5 million barrels per day in the second quarter.
The bank now sees Brent prices at $72.50 per barrel in the second quarter, compared with $65 previously. But it maintained its 2020 Brent oil price forecast at $60 per barrel.
Saudi energy minister said Monday it was premature to say whether a consensus existed among OPEC and its allies to extend oil supply cuts but a meeting next month would be key.
A joint OPEC and non-OPEC ministerial committee known as the JMMC is due to meet in May.
Saudi Arabia and Russia are members of the panel, which includes other major oil producers that took part in a global supply-cutting agreement last year, such as Iraq, the United Arab Emirates, Kuwait, Nigeria and Kazakhstan.
“JMMC will be a key decision point because we will certainly by then know where the consensus view is and, more importantly, before we ask for consensus, we will know where the fundamentals are pointing,” said Saudi Energy Minister Khalid al-Falih.
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