Oil Prices to Reach $72 by Summer

Oil prices will rally faster and sharper than previously expected as demand outstrips supply increases from OPEC+, Iran and U.S. shale, according to Goldman Sachs Group Inc.
A reopening of the global economy will help demand return to pre-COVID-19 levels, but inventories remaining tight into the summer will cause West Texas Intermediate crude oil, the U.S. standard, to reach $67.50 per barrel in the second quarter and $72 in the next three months, according to Goldman. The firm previously forecast WTI would hit $62 this summer.
Goldman said Brent crude oil, the international standard, will hit $75 this summer, up from its previous forecast of $65.
“This year remains driven by fundamentals, with better than expected demand and still depressed supply once again creating a larger deficit than even we expected,” wrote Damien Courvalin, head of energy research at Goldman Sachs.
The firm expects the deficit to widen this spring as production from OPEC and its allies, including Russia, takes longer to return despite an increase in prices.
Higher costs related to ESG and environmental regulation and investor hedging due to fears that additional COVID-19 stimulus will cause inflation will help drive up prices.
WTI crude oil crossed $62 per barrel on Wednesday, and was trading just below that level – near $61 – on Monday.
U.S. oil prices plunged to a record low of -$36.73 a barrel last April as lockdowns aimed at slowing the spread of COVID-19 and a price war between Saudi Arabia and Russia caused inventories to swell.

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