Firmly bullish! Goldman Sachs: Europe is not yet out of the energy crisis, oil prices will rise to $115
Jeff Currie, head of global commodities at Goldman Sachs, remains supportive of oil prices despite OPEC lowering its oil demand forecast for the fifth time this year. He said that Europe is not yet out of the energy crisis, and oil prices are expected to soar before early next year.
In an interview with the media, Currie said that as the European Union's ban on Russian oil comes into effect, and Western countries are also close to reaching the Russian oil price ceiling. The shortage of oil supply may become a problem in the future. Oil prices could be pushed higher if Russia retaliates against the price cap.
Other factors, such as a slowdown in U.S. shale oil production and a halt to releases from the U.S. Strategic Petroleum Reserve, will exacerbate the oil supply deficit, he added. The Biden administration has been using the Strategic Petroleum Reserve since May to curb high oil prices.
"Combined, the market is starting to be bullish towards the end of this year and the beginning of next year," Currie said. The commodity bull warned that oil prices could become a problem as early as December, backing Goldman Sachs' previous forecast for Brent crude.
Europe is not yet out of the energy crisis
Europe has been building up natural gas inventories and boosting purchases of liquefied natural gas (LNG) ahead of winter.
Currie said this would help curb supply shortages caused by cuts in Russian gas supplies, but long-term problems with the energy crisis remained.
"You're never going to get hit by an oncoming train. Europe is prepared, they've dealt with the current problems. But they haven't dealt with next summer and the next winter, so there are still structural issues that need them deal with."
“In the medium to long term, we are not out of the woods yet,” he added.
Oil and gas executives also warned that the real worry is next winter. "I think this winter is sorted out," Bernard Looney, chief executive of BP, told a recent panel at the Abu Dhabi International Petroleum Expo (ADIPEC). Next winter may be more challenging."