Over the past two months, international oil prices have sharply pulled back as concerns about a global recession heat up. But an international energy expert pointed out that as winter approaches, global crude oil supply will tighten rapidly. By the end of this year, oil prices are expected to return to $120 a barrel.
International oil prices fell below $90 a barrel last week. As of now, WTI crude oil futures and Brent crude oil futures hover around US$90 and US$95 respectively, and international oil prices have fallen by about a quarter from their June highs.
(15-minute trend chart of WTI crude oil futures Source: Yingwei Financial Information)
(15-minute trend chart of Brent crude oil futures Source: Yingwei Financial Information)
Recently, the domestic gasoline price in the United States has also continued to fall. The national average gasoline price in the U.S. fell to $4.059 per gallon on Monday, nearly 20% below its all-time high of $5.01 per gallon in early June, according to the American Automobile Association (AAA).
Short-term weakness does not mean that the problem has been solved
Head of research at Energy Aspects, a well-known energy consulting agency, said that oil prices may continue to be weak in the short term. She noted that refineries will soon enter maintenance season and demand for crude oil will be reduced.
But this does not mean that the supply dilemma in the energy market has ended. Sen insists that the problem facing the international oil market is not demand, but supply.
Sen pointed out that in November this year, the United States will stop releasing oil from its strategic oil reserves. She added that China, the world's second largest crude oil consumer, may rush to buy more oil as domestic demand heats up.
In March, the Biden administration ordered the release of 1 million barrels per day from the national emergency crude oil reserves to lower gasoline prices. Last week, the country's emergency crude oil reserves had fallen to their lowest levels in nearly 40 years, according to the U.S. Department of Energy.
In December this year, a partial ban on Russian oil products by EU is expected to take effect in full, which could result in 2.2 million barrels of oil supply exiting the market.
"The market will tighten very, very quickly," Sen said. "We still maintain our oil price expectations of $120 a barrel."
At the same time, major oil producers are not much helping in increasing their supply. Last week, OPEC+ only agreed to a slight increase in crude oil production, with daily output increasing by 100,000 barrels since September, significantly lower than the market's general expectations of an increase of 300,000 to 400,000 barrels per day.
G7 (G7) is currently considering setting a price cap on Russian crude oil, but analysts warn that Russia may take retaliatory measures to cut crude oil production, which will actually push up oil prices.
Goldman Sachs lowered its oil price expectations but is still bullish
As the " commodity standard bearer", Goldman Sachs also updated its oil price expectations a few days ago. Damien Courvalin, head of the bank's energy research department, analyzed in a report that the recent decline in oil prices was mainly caused by a series of concerns, including concerns about the economic recession, the U.S. release of strategic oil reserves (SPRs) and the recovery of Russian production.
Goldman Sachs analysts said that once the above negative shocks are over, the possibility of oil prices rising is still high. Moreover, in recent months, the supply shortage in the crude oil market has remained beyond expectations, and the reasons for rising oil prices are very good.
Goldman Sachs now expects Brent crude oil to rise to $110-125 per barrel in the third and fourth quarters, compared with the previous estimate of $140-130 per barrel; Brent crude oil price in 2023 is $125 per barrel, consistent with previous forecasts.
This article is from Cailianshe
