Goldman Sachs thinks Brent could reach $90 per barrel by year-end: File Image/Pixabay
Oil prices on Tuesday eased somewhat as investors worried that the rising prices may weaken fuel demand; however, tightening supplies globally were enough to keep market sentiment extremely bullish.
Brent fell 17 cents, or 0.2 percent, to $79.36 per barrel at 0121 GMT, and West Texas Intermediate dropped 9 cents, or 0.1 percent, to $75.36 per barrel.
In reference to the commodity's five-day winning streak, Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd, said, "Oil markets took a breather after a long rally, with some investors scooping up profits; still, the market sentiment remained strong with tighter supply."
Toshitaka Tazawa, analyst, Fujitomi Securities Co Ltd.
Market sentiment remained strong with tighter supply
Tazawa added that he expects Brent may breach the $80 threshold soon, and that may indeed be very soon following news on Tuesday that Nigeria and Angola will struggle to boost output to their quota levels as members of the Organization of the Petroleum Exporting Countries (OPEC) until at least next year.
The two countries are said to be plagued with under-investment and maintenance problems.
Meanwhile, the lightning-fast demand recovery despite the worry over the Covid Delta variant, exacerbated by Hurricane Ida's damage to U.S. production, caused Goldman Sachs on Tuesday to raise its year-end forecast for Brent crude by $10 to $90 per barrel.
The more conservative Barclays on Tuesday hiked its 2022 targets for WTI and Brent to $74 and $77 per barrel, respectively; its analysts stated, "A persistent supply deficit is leading to an ever tighter oil market, with OECD inventories likely to end the year at the lowest level of demand cover in decades."
Also, Vivek Dhar, commodities analyst at Commonwealth Bank, suggested that "Oil demand could pick up by an additional 0.5 million barrels per day (bpd), or 0.5 percent of global oil supply, as high gas prices force a switch from gas to oil consumption."
For its part, Rystad Energy predicted that liquefied natural gas prices has widened the gap with oil prices and could boost oil demand in Asia by 400,000 bpd over the next two quarters; Claudio Galimberti, senior vice president on Rystad Energy's oil markets team, said, "From a global oil balance perspective too, this would be a significant shift, and it provides support to the current rally in oil prices."