- Goldman Sachs cut its 2024 oil price outlook by $10 a barrel in a Sunday note.
- Citing the US production boom, the bank expects Brent crude to peak at $85 a barrel in June.
Goldman Sachs now sees oil prices increasing next year less than previously forecasted, largely thanks to a US production boom.
In a Sunday note, strategists led by Daan Struyven said they were trimming their price outlook for Brent crude by $10 a barrel to the $70-$90 range.
By June 2024, Goldman expects the international benchmark to peak at $85 a barrel, then average $81 or $80 over the next two years, down from a $92 prior forecast.
"The recent US supply beats strengthen the key trend of 2023, namely much stronger than expected production outside of OPEC," according to Goldman Sachs.
Over the next year, the strategists anticipate moderate price volatility, as spare capacity limits the impact of tightening shocks and upside to prices.
Downside price moves, too, will remain limited because OPEC+'s incentives to prevent over-supply will remain in place, and easing financial conditions should provide a floor to oil demand.
Meanwhile, the Wall Street giant said Saudi Arabia is unlikely to "flush" the market by reversing production cuts and unleashing a flood of new supply that would drive prices lower and weaken US companies, even though other industry experts have said otherwise.
"Non-price factors have driven US supply beats, including one-off easing in supply constraints, drawing of well inventories, and private oil firms' pre-acquisition output jumps," Goldman added. "Second, Saudi price war incentives are weaker than in 1985 when its market share had plunged, and than in 2014 when it had less ambitious investments and when excessive borrowing left US shale vulnerable."
On Monday, West Texas Intermediate climbed 2.77% to $78.21 a barrel, while Brent moved higher 2.83% to $78.73 a barrel. Oil prices have declined roughly 20% since September.