Goldman Sees Some Near-Term Upside for Oil Prices, Brent at $77/bbl in 4Q — OPIS

The commodities team at Goldman Sachs in a note to clients Monday said that Brent could rally to $77/bbl in the fourth quarter.

The bank said the Federal Reserve's rate cut of 50 basis points and strong U.S. economic data are supportive of near-term price movements, adding that the formation of Hurricane Helene demonstrates that hurricane supply disruptions could still be a factor.

Brent crude rallied by about 4% last week thanks to increased fighting in the Middle East, but Monday saw a selloff triggered by de-escalatory rhetoric from Iran's president. As of midmorning Tuesday, the Brent price for December delivery was hovering around $74.35/bbl.

Goldman's scorecard for global supply suggests a recent decline rate of about 500,000 b/d thanks to lower output from Canada, Russia and the Lower 48 of the U.S. Bank analysts also said that global demand has edged up thanks to boosts in OECD countries as well as China and it sees a possibility of further Chinese policy easing.

Much of last week's recovery in prices occurred for long-dated prices, but Goldman believes that the 1-month/36-month Brent time spread is about $8/bbl below where it should be.

The investment house's scorecard for global supply and demand in the last 90 days calculates that demand exceeded supply by 700,000 b/d on average. Goldman said that implied volatility for Brent is meager, falling in the low 17th percentile.

The bank closed the Monday analysis with a reiteration of a trade recommendation where parties buy the European distillate crack, but that play has been a loser thus far. Back on March 11, it recommended going long the Gasoil/Brent crack at $23.58/bbl. As of Tuesday, the trade has lost $7.95/bbl with a crack of $15.62/bbl.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Tom Kloza, tkloza@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com

(END) Dow Jones Newswires

September 24, 2024 11:23 ET (15:23 GMT)

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