Goldman Sachs stated in a report on Sunday that oil prices are likely to trend lower this year as a wave of supply creates a market surplus, although geopolitical risks related to Russia, Venezuela, and Iran will continue to drive price volatility.
The bank maintained its average price forecasts for 2026 Brent crude and West Texas Intermediate (WTI) at $56 and $52 per barrel, respectively, and anticipates they will bottom out in the final quarter at $54 and $50 as OECD inventories increase.
"Rising global oil inventories, coupled with our expectation of a 2.3 million barrels per day surplus in 2026, suggest that rebalancing the market will likely require lower oil prices in 2026 to slow non-OPEC supply growth and support steady demand growth, barring major supply disruptions or OPEC cuts," Goldman Sachs said.
As of 0412 GMT on Monday (1212 Beijing Time), Brent crude futures were trading around $63 per barrel, while WTI crude held near $59. Both benchmark indices recorded their worst annual performance since 2020 last year, declining by nearly 20%.
Goldman Sachs analysts noted that US policymakers' focus on robust energy supplies and relatively low oil prices would likely curb a sustained price rally ahead of the midterm elections.
The analysts projected in the report that oil prices would begin a gradual recovery starting in 2027, as the market returns to a supply deficit driven by slowing non-OPEC supply and persistently strong demand growth.
The bank forecasts an average 2027 price for Brent/WTI crude of $58/$54, which is $5 lower than its previous forecast, citing upward revisions to 2027 supply estimates for the US, Venezuela, and Russia by 300,000, 400,000, and 500,000 barrels per day, respectively.
Goldman Sachs stated that after years of low long-cycle investment, it expects oil prices to rise significantly by the end of this decade as demand grows, with the average Brent/WTI price for 2030-2035 reaching $75/$71, also $5 lower than prior expectations.
The bank indicated that risks to its oil price outlook are slightly skewed to the downside, given the potential for further increases in non-OPEC supply, and added that it does not expect OPEC to implement production cuts, despite existing geopolitical risks and low speculative positioning.
"We continue to recommend that investors take a short position on the Brent crude time spread for 2026Q3-Dec2028 to express the view of a 2026 surplus, while oil producers hedge against 2026 price downside risks," the bank said.
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