Goldman Sachs cuts oil price forecast for 2025 amid rising inventories, weak demand
Date
8/28/2024 5:03:05 AM
(MENAFN) Goldman Sachs has revised its brent crude oil price forecast for 2025, lowering it by USD5 per barrel due to a surprising rise in global oil inventories and weaker demand from China. In a note to clients, the bank reduced its price range for Brent crude to USD70-USD85 per barrel, with an expected average of USD77 per barrel in 2025, down from the previous estimate of USD82. This downward revision reflects a mix of unexpected factors, including higher-than-anticipated U.S. oil supplies and slower demand growth in China. While these trends are expected to weigh on prices, Goldman Sachs noted that robust demand in India and lower interest rates, among other influences, are helping to mitigate a steeper decline. Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) has adjusted its global oil demand growth forecast for next year to 1.78 million barrels per day, down from an earlier estimate of 1.85 million barrels per day. Goldman Sachs also assumes that OPEC will increase production in the fourth quarter, which could further impact market dynamics.
The landscape of oil production has been tightly managed by OPEC+—a coalition of OPEC members and allies, including Russia—since late 2022. This group has executed a series of production cuts to stabilize the market, many of which will remain in place until the end of 2025. However, on August 1, OPEC+ confirmed plans to gradually lift the latest round of production cuts, which amount to 2.2 million barrels per day, beginning in October. The group remains flexible, signaling that it could pause or reverse these changes if market conditions require it. Recently, oil prices, which had surged over 7 percent in three consecutive sessions due to concerns over potential supply disruptions in the Middle East and the closure of Libyan oil fields, have started to retreat, suggesting a volatile market ahead.
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