Goldman Sachs cuts Brent crude futures forecast to $94

Goldman Sachs has cut its forecast on Brent crude oil futures from $100 per bbl amid a sharp fall in crude oil prices on banking and recession worries.

The global investment bank now expects crude to average at $94 per bbl in the next 12 months and $97 per bbl in the second half of 2024.

The prices have slumped 15% since early March on banking and recession fears, Reuters reported.

“Oil prices have plunged despite the China demand boom given banking stress, recession fears, and an exodus of investor flows,” the Reuters report said quoting the bank’s analysts.

“Historically, after such scarring events, positioning and prices recover only gradually, especially long-dated prices,” the report added, lowering demand projections for Europe and North America in 2023 while raising that for China.

This led to a 600,000 barrel per day cut for 2024 estimates while keeping the 2023 demand forecast unchanged.

Weakness in crude oil prices continued on Monday as both benchmarks Brent and US WTI were trading in the red. The spot price of Gold was $72.15 per bbl while that of US West Texas Intermediate (WTI) was at 66.79, commodity and currency expert Anuj Gupta told ETMarkets.He said that weakness in oil prices is welcome news from the Indian standpoint as this would lower India’s import bills lowering the current account deficit (CAD). Imports account for over 80% of the country’s oil requirements, Gupta noted.

His advice to crude oil futures traders is to buy March MCX Crude Oil contracts at Rs 5,450 with a stop loss at Rs 5,350 and a price target of Rs 5,650.

The 20 March Crude Oil futures were trading at Rs 5,409 per bbl on the MCX at 12 pm and were down by Rs 120 or 2.17% from the previous close.

Prathamesh Mallya, Assistant Vice President – Research, Non-Agri Commodities, and Currencies at Angel One expects crude prices to remain under pressure.

“Crude prices are expected to remain under pressure, given the uncertainty around the banking crisis and the growing crude stockpiles, which would keep upside limited,” Mallya said.

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