U.S. investment bank Goldman Sachs predicted OPEC and non-OPEC oil-producing OPEC+ will cut additional output at a meeting on Dec. 4 and international oil prices will rise to $110 a barrel next year.
According to CNBC on the 29th (local time), Jeff Curry, head of Goldman Sachs’ commodities division, said, “OPEC, a non-OPEC oil producer association, is likely to decide to cut production to block falling oil prices on December 4th.”
Brent crude oil from North Sea, a global benchmark, reached $100 per barrel in August, but has now fallen to the 84-dollar level, while West Texas Intermediate (WTI), a benchmark for U.S. crude oil, has fallen to the 79-dollar level per barrel. On the same day, WTI’s January delivery on the New York Mercantile Exchange closed at $78.20 per barrel, up 1.24% (0.96 dollars) from the previous trading day. In addition, Brent crude oil from North Sea rose 0.95% ($0.80) to $84.95 per barrel on the ICE Futures Exchange in February next year.
Earlier in the meeting in early October, OPEC+ rejected the U.S. request to increase production to lower oil prices and decided to cut production by an average of 2 million barrels a day from November.
In a CNBC interview during a carbon economics conference in London, U.K., Jeff Curry, CEO of Goldman Sachs, said OPEC Plus is expected to choose to cut production further due to the possibility of a recent economic slowdown and a drop in China’s demand for crude oil due to the COVID-19 policy.
Goldman Sachs recently lowered its oil price forecast for the fourth quarter of this year to $100 from the previous $10. CEO Curry said he lowered the oil price outlook in consideration of various factors, citing three factors: the strong dollar, Corona, China, and Russia’s oil exports.
CEO Curry said, “There is still considerable uncertainty related to China,” adding, “Considering the current situation in China, there is a possibility that demand will decrease further.” CEO Curry pointed out that even if China forcibly reopens the economy, the key is that there is a risk that demand for crude oil could be further reduced by people refraining from using public transportation such as trains or going to work.
“The OPEC+ participants, which will meet in December, will discuss whether to accept China’s further sluggish demand,” he said. “The probability of a production cut is very high.”