Oil Demand Soars as Recession Fears Dissipate: Goldman Sachs Anticipates a New "Supercycle"
Crude Prices Poised for a "Supercycle" as Evidence of Recession Disappears, says Goldman Sachs
Goldman Sachs predicts a new "supercycle" for oil, with Brent Crude prices expected to surge by approximately 16% to $86 per barrel by the end of the year. Jeff Currie, head of global commodities research at Goldman Sachs, dismisses recession fears and emphasizes a rebound in oil demand. The decline in U.S. retail gasoline prices, which contributed to a drop in inflation, is anticipated to reverse. Western sanctions, recession fears, and rising interest rates have suppressed crude prices, but Currie argues that changing fundamentals will drive a price increase. The tightening supply, including falling U.S. crude inventories and the need to refill the Strategic Petroleum Reserve, further supports a bullish scenario. Despite fluctuations in Currie's price forecasts over the past year, his long-term belief in a commodity supercycle remains. Other industry experts, such as Wells Fargo's head of real asset strategy, also foresee an extended period of elevated oil prices. As global markets experience a rebound, commodities like natural gas, coal, copper, and wheat are showing signs of recovery, reinforcing the notion that concerns of a recession are unsubstantiated.
Shifting Market Dynamics and Tightening Supply Support Goldman Sachs' Bullish Outlook on Oil Prices
Goldman Sachs predicts that the oil industry is on the precipice of a new "supercycle," with Brent Crude prices expected to soar by approximately 16% to $86 per barrel by the year's end. Jeff Currie, the head of global commodities research at Goldman Sachs, dismisses concerns about a recession and emphasizes a rebound in oil demand. He dismisses the previous decline in U.S. retail gasoline prices as contributing to a drop in inflation and anticipates a reversal in this trend. Currie argues that changing fundamentals, such as falling U.S. crude inventories and the need to refill the Strategic Petroleum Reserve, will drive a significant increase in prices. Notably, Currie's long-term belief in a commodity supercycle remains, supported by other industry experts like Wells Fargo's head of real asset strategy. These experts foresee an extended period of elevated oil prices as global markets experience a rebound, with other commodities like natural gas, coal, copper, and wheat also showing signs of recovery.
According to Currie, the decline in crude prices this year can be attributed to ineffective Western sanctions against key oil suppliers, fears of a recession, and rising interest rates. However, he argues that the market dynamics around supply and demand are now shifting, resulting in a bullish scenario for oil prices. The tightening supply, including the reduction of U.S. crude inventories and the necessity to replenish the Strategic Petroleum Reserve, signals a turnaround. Furthermore, Currie highlights the rebound in a variety of commodities like natural gas, coal, copper, and wheat, suggesting that concerns of a recession are unsubstantiated.
Summing it up
Although Currie's price forecasts have experienced fluctuations over the past year, he remains confident that a commodity supercycle is inevitable and that oil prices will continue to rise in the long term. These predictions are backed by other industry experts, further reinforcing the notion that concerns of a recession are unfounded. As global markets rebound and various commodities show signs of recovery, the outlook for oil and other related industries looks positive.
Investors and market participants should take note of the changing fundamentals and the potential for a significant increase in oil prices. The tightening supply, coupled with the need to refill the Strategic Petroleum Reserve, suggests a bullish scenario for the future. Understanding the trends and dynamics in the oil market can provide valuable insights for investment decisions and risk management strategies.
While it is important to acknowledge that price forecasts may experience fluctuations, the overall trajectory points towards a potential supercycle in the oil industry. Assessing these trends and staying informed about the changing dynamics will be essential for investors and businesses operating in the oil sector.
In conclusion, as Goldman Sachs predicts a "supercycle" for oil and dismisses recession concerns, the outlook for crude prices appears optimistic. The changing fundamentals, supported by a rebound in commodities and the projections of industry experts, suggest that concerns of a recession are not substantiated. Market participants should monitor these developments closely to make informed decisions and
Originally Published at: https://fortune.com/2023/06/29/no-recession-evidence-oil-price-outlook-goldman-sachs-commodity-supercycle/
Business Topic: Economy