(Reuters) - Goldman Sachs on Wednesday re-issued its 2018 global oil demand growth forecast of 1.85 million barrels per day (bpd), despite recent signs of a slight slowdown, citing a strong start to the year and a pattern of second-quarter demand acceleration.
“Oil data for January points to strong global demand growth, consistent with the robust economic momentum entering 2018,” analysts at the bank said in a note.
Goldman attributed the recent slide in oil prices to seasonality, saying data from the past decade suggested weakness in demand could now be witnessed during the first quarter of the year, whereas historically it occurred in the second quarter.
“This new pattern suggests that while expectations for demand growth may be low for 2Q, the seasonal trough in demand may actually be already occurring, leaving oil demand growth to squarely surprise to the upside this spring,” the analysts said.
While a slew of economic data releases last week came in below market expectations, and trade disputes and tariffs could dampen oil demand, the impact is likely to be gradual and could be offset by a weaker dollar, the bank said.
“We continue to expect that the broad macro set-up for 2018 will remain supportive of oil demand and our 2018 demand growth forecast remains 1.85 (million bpd), well above consensus expectations,” Goldman’s analysts said.
This demand outlook exceeds growth from shale and other non-OPEC producers this year, the bank said, and will lead to a further fall in inventories in the third quarter, to below their five-year average levels, prompting another rally in prices.
Oil prices steadied on Thursday, supported by healthy demand, after falling the previous day on news of record U.S. crude production and rising inventories. [O/R]
Reporting by Arpan Varghese in BENGALURU; Editing by Tom Hogue