Oil to rise to $86 a barrel this quarter on ‘solid summer demand’, says Goldman

Oil prices are expected to rise this summer on transportation and cooling demand. Goldman Sachs analysts forecast Brent crude prices to rise to $86 a barrel, up nearly 7% from current levels.

On Monday, West Texas Intermediate (CL=F) was trading just above $76.50 a barrel, while Brent (BZ=F), the international benchmark, was above $80.50 a barrel.

“We expect healthy consumers and solid summer demand for transportation and cooling to push the market into a sizeable deficit in the third quarter,” wrote Daan Struyven, managing director and head of oil research at Goldman Sachs.

The analyst and his team expect Brent to rise to $86 a barrel in the third quarter and stuck with their forecast of $75 to $90 a barrel.

Oil has been on a downtrend since April, exacerbated recently after the OPEC+ oil alliance said it would begin to reverse some of its voluntary production cuts starting in October.

The phasing out of production should prevent prices from rising too much, while buying activity will increase if prices fall too much.

“We still see $75/bbl as a level below Brent. First, physical oil demand, including from China and the US Strategic Petroleum Reserve (SPR), tends to increase when prices fall,” the analysts wrote.

Last week, the Energy Department announced new requests for 3.1 million barrels on top of the 3 million that were recently secured for the SPR.

Last week, JPMorgan analysts said oil’s recent pullback was likely temporary.

“Summer inventory draws should be enough to bring Brent back into the high $80-$90 range by September,” Natasha Kaneva, head of global commodities strategy at JPMorgan, wrote in a note from Thursday.

Wall Street widely predicts that slowing demand amid higher supply will push prices lower next year, with JPMorgan analysts forecasting Brent to average $75 in 2025, down sharply from $83 in 2024.

Goldman Sachs kept its target for next year unchanged at an average of $82 a barrel.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow X at @ines_ferre.

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