Oil price forecast set to hit $49 by year-end, says Goldman Sachs
Brent crude is expected to hit $49 a barrel by the end of 2020 and push on to reach $65 by the third quarter of 2021, according to bullish analysts at US-based investment bank Goldman Sachs.
- Analysts at Goldman Sachs predict Brent crude will hit $49 a barrel by year-end
- Many analysts had forecast oil prices to average $50 a barrel in 2021
- OPEC threatens to take action against members not complying with production cuts
Analysts at Goldman Sachs are bullish about the price outlook for oil, with the US-based investment bank expecting a deficit of around three million barrels per day by the fourth quarter (Q4) 2020, which could push Brent crude prices to $49 before the end of the year.
‘We estimate that the oil market remains in deficit with speculative positioning now at too low levels,’ Goldman Sachs said in a note.
Its analysts are also upbeat about the price of oil over the longer term too, with the bank forecasting that Brent crude could rally to $65 a barrel by Q3 2021.
‘There is a growing likelihood that vaccines will become widely available starting next spring, helping support global growth and oil demand, especially jet,’ Goldman Sachs analysts said.
Brent crude is trading five cents higher at $43.35 a barrel at the time of publication, while the US West Texas Intermediate (WTI) is up 29 cents to $41.26 a barrel.
OPEC to take action against members not complying with cuts
For oil prices to hit the sort of levels that Goldman Sachs predicts next year, it will take a coordinated effort from OPEC+ to keep a close eye on supply and adhere to necessary production cuts to offset weaker demand due to the coronavirus pandemic.
During a meeting on Thursday, OPEC+ agreed to cut output by 7.7 million barrels of oil per day and warned those in attendance that the organisation would take decisive action against any member that chose not to comply with the agreement.
The de-facto leader of OPEC, Saudi Arabia, also warned that more extreme production cuts may be required if oil prices fell further due to weakening energy demand if a second wave of coronavirus cases forces governments to administer additional lockdowns.
WTI rallies by leaps and bounds
Oil continues its impressive recovery, rallying back towards $42, where the price hit resistance on its way down earlier in the month, according to Chris Beauchamp, chief market analyst at IG.
‘Above $42 the next target is $43.60 and the high of August,’ he added.
‘Given the sharpness of the move in recent sessions some consolidation is possible, with a more bearish view requiring a move back below $39.’
How to trade commodities with IG
Looking to trade oil and other commodities? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs and spread bets in a few easy steps:
- Create an IG trading account or log in to your existing account
- Enter ‘Oil - Brent Crude’ in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
React to volatility on commodity markets
Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1
- Wide range of popular and niche metals, energies and softs
- Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
- View continuous charting, backdated for up to five years
1In the case of all DFBs, there is a fixed expiry at some point in the future.
See opportunity on a commodity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See opportunity on a commodity?
Don’t miss your chance. Upgrade to a live account to take advantage.
- Analyse and deal seamlessly on fast, intuitive charts
- Get spreads from just 0.3 points on Spot Gold
- See and react to breaking news in-platform
See opportunity on a commodity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
