Brent crude oil forecast boosted by Goldman Sachs analyst

July 24, 2023 01:25 AM PDT | By Invezz

Brent crude oil forecast boosted by Goldman Sachs analyst — Image source: Invezz

Goldman Sachs is bullish on oil

Brent and West Texas Intermediate (WTI) has done well in the past few weeks as concerns about the world economy continue. The jump on Monday happened after China decided to deliver some stimulus measures.

For example, Beijing vowed to treat private entities in the same way as the giant state-owned companies. It also vowed to improve key areas like intellectual property and land rights among others.

Analysts believe that these measures will have limited impact on the economy. Indeed, most companies believe that the country’s growth will be lower than expected. JP Morgan, Citi, and Morgan Stanley expect the economy will grow by 5%. In all, the average estimate is for the economy to grow by 5.1% this year.

Trends in Chinese GDP numbers are important for crude oil prices because it is the biggest consumer in the world.

Still, there are signs that oil demand is soaring. In a statement, analysts at Goldman Sachs believe that the industry will go through deficits as demand jumps. In a statement, Daan Struyven said:

“We expect pretty sizable deficits in the second half with deficits of almost 2 million barrels per day in Q3 as demand reaches an all-time high. We expect U.S. crude supply growth to slow down pretty significantly to a sequential pace of just 200 barrels per day from here.”

Crude oil price has jumped as Saudi Arabia and OPEC have moved to reduce supplies in the past few months. Earlier this month, we wrote that Saudi Arabia and Russia decided to continue with their cuts for a while.

Brent crude oil price forecast

The daily chart shows that the Brent crude oil price has been in a bullish trend in the past few days. It has moved slightly above the key resistance level at $78.68, the highest point on June 5th.

Brent has moved above the 25-day and 50-day moving averages while the MACD has jumped above the neutral point. The Relative Strength Index (RSI) has moved slightly below the overbought level.

Therefore, there is a likelihood that oil prices bottomed at $71.37, where it formed a triple-bottom pattern. If this happens, the next level to watch will be at $87.60 (April 12 high). This price is a few points above Goldman Sachs oil target of $80.

The post Brent crude oil forecast boosted by Goldman Sachs analyst appeared first on Invezz.

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