Oil could hit $100 a barrel in 2023 as supply is forecast to grow slowly while demand is at a record high, according to Goldman Sachs.
Suddenly forcing oil prices to spike high enough to hold back demand, said Damien Courvalin, director of energy research at Goldman Sachs.
The upside potential remains large, which is why Goldman Sachs remains bullish on oil even as the price of “black gold” has rallied more than 40% this year.
The investment bank views the recent sell-off as outrageous due to unnecessary concerns over restrictive requirements related to the Omicron variant and expects investors to bottom out as soon as asset managers capital reallocation next year.
“Supply is not enough to meet demand,” Mr. Courvalin said on December 17. The price of oil must be higher than the cost of capital to finance the projects.”
The recent $10 drop in oil prices equates to a 5 million bpd drop in demand for three months.
That might be an overreaction, Mr. Courvalin said, as governments appear to be dealing with the Omicron variant with more control measures than re-impositioning a new blockade.
In the longer term, GDP growth is facing challenges of inflation and more expensive funding as investors choose to support ESG-focused sectors (environmental, social and economic factors). administration).
Investment in long-duration oil projects also declined due to uncertainty surrounding energy transition and its impact on fuel use.
Demand for gasoline, diesel and plastics is currently at record highs, with consumption expected to peak in 2022 and 2023, Courvalin said.
Jet fuel usage will continue to slow due to Covid-19 travel restrictions, some pent-up travel demand is likely to emerge as borders reopen.