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Goldman Sachs Expects Large Oil Demand Rebound in Summer

Goldman Sachs is still bullish on oil and anticipates that there would be strong demand that would require OPEC+. It will put another 2 million barrels per day in the market in the third quarter. Around 2 million BPD was returned on the alliance and Saudi Arabia decision between May and July. Sachs said, “We forecast a larger rebound in oil demand this summer than OPEC and the IEA, requiring an additional 2 mb/d increase in OPEC+ production from July to October.”

The investment bank expects an excess oil inventory to normalize by the fall of 2021. The OPEC+ agreement of last week will ease the cuts “comes a month sooner than we had expected,” said Goldman Sachs. The company noted that the increases for June and July are smaller than its analysts had anticipated.

On Thursday, OPEC+ gradually increased collective oil production by over 1 million BPD over the next three months. Its production will increase by 350,000 BPD in May and June, which will be more than 400,000 BPD in July. The extra unilateral cut of 1 million BPD at Saudi Arabia will also be gradually eased for the next few months. A monthly production increase of 250,000 BPD, each of May and June, can be expected.

Sachs continues to hold a bullish view on oil demand despite the recent demand concerns in Europe and India. At the beginning of March, Goldman Sachs said that it expected the Brent Crude prices to hit $80 a barrel in the third quarter of this year.

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