Goldman Sachs slashed its oil price forecasts for 2023, saying it sees a market surplus early next year easing risks of winter price spikes.

The Wall Street bank in a note dated Tuesday cut its Brent oil forecasts for the first and second quarter of 2023 to $90 and $95 a barrel from $115 and $105 per barrel respectively.

The bank said there was less risk of oil prices spiking this winter with China consuming less than previously expected, Russia exporting near pre-war levels, and production issues easing in Kazakhstan and Nigeria.

Goldman expects the oil market to end the current quarter with a surplus of 1.6 million barrels per day (bpd), while seasonally lower demand would leave the first quarter next year with a surplus of 1.3 million bpd.

It forecasts global demand will grow by 2 million bpd in 2023, as China reopens and international travel recovers.

For 2023r, Goldman said it sees Brent oil averaging $98 per barrel and WTI at $92 a barrel, down from its earlier forecasts of $110 for Brent and $105 a barrel for WTI.

For the final two quarters of next year, Goldman said it expects Brent to rise to $100-$105 a barrel, still lower than its previous forecasts of $110 per barrel.

It said it expects prices to rise in 2024, with Brent averaging $105 per barrel and WTI $99 a barrel.

So far this quarter, Brent crude prices LCOc1 are down nearly 6%. They have fallen more than 40% from a March peak of $139 a barrel. O/R

“Despite the recent price declines, commodities will still likely finish the year as the best performing asset class in 2022,” Goldman said in a separate research note on Wednesday, seeing S&P GSCI TR returns of about 23% this year and 43% in 2023.
Source: Reuters (Reporting by Deep Vakil in Bengaluru; Editing by David Gregorio)