Goldman Sachs believes that the price of North Sea oil will reach 75 dollars a barrel in the third quarter.
Oil prices have risen sharply this year, and last week it rose further in the wake of the cold in Texas hitting US oil production.
Monday morning, the price of North Sea oil (burnt spot) is 63.8 dollars per barrel, which means that it has risen over 20 percent since the turn of the year.
It is the highest oil price since before the corona crack, but Goldman Sachs’ analysts believe there is far more to go on.
Several years ago last
The US Federal Reserve has now raised its price forecasts for North Sea oil to 70 dollars in the second quarter and 75 dollars in the third quarter, according to a note from Sunday, writes the news agency Bloomberg.
The autumn of 2018 was the last time the price for North Sea oil was over 75 dollars a barrel, while it was just under April 2019.
Goldman Sachs explains its positive view with expectations of a tight oil market.
This is partly due to increased demand, which the major bank predicts will be back at the levels from before it was hit by the corona at the end of July, Bloomberg writes.
The oil group Opec + is expected to increase its production, but the major bank believes this will not be enough to meet demand.
Goldman Sachs also does not expect more activity from countries outside Opec +.
At the same time, it is pointed out that the profit season in the USA has shown that the large oil companies that produce and look for oil do not envisage starting up new, larger projects, according to Bloomberg.
Sharp jump in speculation on oil prices: – Rare that we see
Not as positive
SEB’s forecast is that the price of a barrel of North Sea oil will average 65 dollars in the third quarter.
– The oil price is where it is today solely because Opec + has cut an insane amount and still holds back 8.1 million barrels versus production in October 2018, raw material analyst Bjarne Schieldrop in SEB emphasizes to E24.
He believes that oil giant Saudi Arabia will probably end its production cut of one million barrels per day. It is currently running through March.
– At the same time as Russia and Kazakhstan will demand to produce more. Russia is not willing to give market shares to US shale oil as long as they themselves hold back production.
At the beginning of March, the Opec group will meet for a new meeting.
When the corona crisis hit the oil market, Opec + responded by cutting production by ten million barrels a day, in an attempt to create balance in the market. The oil countries are still keeping production away from the market, but the plan is to gradually turn up the oil tap again.
“Saudi Arabia will probably want to” milk “the situation for what it is worth and pull the price further up by holding back production, while Russia will return to normal production at current prices as soon as possible,” says Schieldrop.
He comments on developments in the American shale oil industry as follows:
– There is a lot of talk that they are now very careful about spending money, but so far we see that the number of rigs is increasing as fast today (and last 21 weeks since the end of September) as they did from June 2016 and beyond 21 weeks. So I’m not 100 percent convinced that they’ll hold back that much if the oil price is good.
Speculators are betting on price jumps
E24 wrote last week that speculators in the paper market are betting more and more money that the oil price will continue to rise in the future.
– The speculative positions have risen over time, and especially on WTI (American light oil) they are high in relation to historical levels. In burnt (North Sea oil) it is not as high historically, but it is still at relatively high levels, said oil analyst Helge André Martinsen in DNB Markets.
Martinsen also believes it will be important to follow the upcoming meeting for Opec and its allied countries in March.
– Now they are in a position where they have to think carefully. At $ 60 a barrel, shale (American shale oil) can grow well. It does not happen tomorrow, but in time it is possible. Opec + still has eight million barrels of spare production capacity, so if oil prices rise too much and too fast, they will trigger growth in shale. It is both a headache and a delicate balance for Opec, said Martinsen.
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