Goldman sees oil price pullback as buying opportunity

Goldman Sachs believes that the current decline in the price of a barrel of oil represents a buying opportunity and expects Brent crude to reach $ 80 a barrel this summer.

The bank expects a significant increase in global demand for oil in the coming months, thanks to indications of demand in regions experiencing high rates of immunization from Covid-19, while its forecast for Brent crude increased from $ 65 a barrel in March 2021 to $ 80 a barrel next summer.

Oil prices are set to drop about 9% this week after growing worries about weak demand in Europe and a strengthening U.S. dollar sent Brent futures down about 7% on Thursday. 

Brent jumped above $ 70 a barrel on March 8 for the first time since the Covid-19 pandemic began.

Despite the sharp drop in prices, Goldman Sachs expects that the oil market will quickly regain its equilibrium in the coming months.

“We estimate that the oil market has remained in a large 2.5 million bpd deficit since February despite our estimate that Iran exports have increased by 0.7 million bpd year-to-date,” Goldman said in a note dated March 18.

The bank expects a significant increase in global oil demand in the coming months, comforted by demand indicators in areas of high COVID-19 vaccination, with its Brent forecast rising from $65 per barrel in March to $80 per barrel this summer.