Goldman Sachs (NYSE:GS) has slashed its crude oil price forecasts for 2023 and 2024, citing the recent decline in oil prices as banking and recession fears have seen investor flows dry up.
The investment bank now expects oil to average $94 a barrel in the next 12 months and $97 in the second half of 2024, down from its previous forecast of $100.
“Oil prices have plunged despite the China demand boom given banking stress, recession fears, and an exodus of investor flows,” the bank’s analysts said in a note.
“Historically, after such scarring events, positioning and prices recover only gradually, especially long-dated prices.”
Oil prices rallied on Monday, rising 1.8% to US$68.85 in the early afternoon in New York after hitting their lowest levels in 15 months.
City Index and FOREX.com market analyst Fawad Razaqzada said, like everything else, crude oil prices have bounced back sharply off their recent lows over the past day and a half as risk sentiment improved following the coordinated actions of major central banks at the weekend and UBS’s takeover of Credit Suisse.
“But the fact oil prices had been trending lower for months, their breakdown last week from a multi-week consolidation pattern suggests there may be more downside potential in oil prices,” Razaqzada said.
“For now, news that Russia has decided to keep its oil production at a reduced level through June and calmer market conditions have helped to keep prices in the positive territory.”
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