Goldman Sachs forecasts Brent crude oil prices may surge to $77 per barrel by year-end, driven by Federal Reserve interest rate cuts and robust US economic data.
The investment bank’s outlook, released Tuesday, also cites Hurricane Helene’s formation as a reminder of potential supply disruptions.
Brent crude rallied 4% last week amidst Middle East tensions but retreated Monday following conciliatory remarks from Iran’s president. As of Tuesday, December delivery Brent traded at $74.35 per barrel.
Goldman’s analysis predicts a 500,000 barrels per day (bpd) global supply dip, driven by decreased output in Canada, Russia, and US shale regions.
Meanwhile, global demand is increasing, particularly in OECD countries and China, with potential policy easing in China boosting demand growth.
The bank recommends buying European distillate, despite underperformance since March. Goldman also suggests the Brent one-month to 36-month price spread should widen by $8.
Brent’s implied volatility remains low, ranking in the 17th percentile.