Goldman sees oil market surplus in early 2023, slashes price forecasts

The Goldman Sachs company logo is on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 13, 2021. REUTERS/Brendan McDermid/

Dec 14 (Reuters) - Goldman Sachs slashed its oil price forecasts for 2023, saying it sees a market surplus early next year easing risks of winter price spikes.

The Wall Street bank in a note dated Tuesday cut its Brent oil forecasts for the first and second quarter of 2023 to $90 and $95 a barrel from $115 and $105 per barrel respectively.

The bank said there was less risk of oil prices spiking this winter with China consuming less than previously expected, Russia exporting near pre-war levels, and production issues easing in Kazakhstan and Nigeria.

Goldman expects the oil market to end the current quarter with a surplus of 1.6 million barrels per day (bpd), while seasonally lower demand would leave the first quarter next year with a surplus of 1.3 million bpd.

It forecasts global demand will grow by 2 million bpd in 2023, as China reopens and international travel recovers.

For 2023r, Goldman said it sees Brent oil averaging $98 per barrel and WTI at $92 a barrel, down from its earlier forecasts of $110 for Brent and $105 a barrel for WTI.

For the final two quarters of next year, Goldman said it expects Brent to rise to $100-$105 a barrel, still lower than its previous forecasts of $110 per barrel.

It said it expects prices to rise in 2024, with Brent averaging $105 per barrel and WTI $99 a barrel.

So far this quarter, Brent crude prices are down nearly 6%. They have fallen more than 40% from a March peak of $139 a barrel.

"Despite the recent price declines, commodities will still likely finish the year as the best performing asset class in 2022," Goldman said in a separate research note on Wednesday, seeing S&P GSCI TR returns of about 23% this year and 43% in 2023.

Reporting by Deep Vakil in Bengaluru; Editing by David Gregorio

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