Wall Street analysts are issuing a stark warning as crude oil prices surge towards a potential milestone of $100 per barrel. Goldman Sachs, a prominent financial services firm, is the latest to revise its crude price projection for the upcoming year, attributing the surge to a supply deficit stemming from output reductions by the world’s leading oil producers and their allies, collectively known as OPEC+. This shortage has been compounded by independent cutbacks from Saudi Arabia and export limitations in Russia.
As of the latest market data, West Texas Intermediate (WTI) crude oil (CL=F) is precariously perched above the $90 per barrel threshold. Simultaneously, Brent crude futures (BZ=F) recently achieved a 10-month intraday high, surging to $95.95. These figures signify a 30% surge over the past three months. Goldman Sachs anticipates OPEC will exert control over prices within the range of $80 to $105 throughout 2024.
Earlier this week, Citi’s global head of commodities research, Ed Morse, echoed similar sentiments, forecasting a possible $100 per barrel mark in the near term. However, Morse suggested this elevation might be temporary, envisaging a subsequent retreat due to increased supply from non-OPEC nations such as the United States, Canada, and Brazil. His team of analysts predicts an average of $84 per barrel in the fourth quarter of 2023, with crude oil prices expected to recede to the lower-$70 range in 2024.
RBC Capital Markets has also raised the prospect of $100 per barrel, characterizing the current oil market as “momentum-based.” In a recent communication to investors, analysts Michael Tran and Helima Croft conveyed, “The notion of $100/bbl remains a departure from our base case scenario, but we have come to appreciate that this oil market has evolved into as much of a momentum-based market as it is a fundamentally grounded one when considering near-term prices.”
While the attainment of $100 per barrel remains speculative, market experts acknowledge the likelihood. Regardless of the outcome, if crude prices persist on their upward trajectory, consumers may soon grapple with escalated costs at the gas pump and potentially increased inflation downstream. This could pose a significant challenge to the Federal Reserve’s interest rate policies. The market’s trajectory remains uncertain, and analysts are vigilant for any further developments.
Source: Yahoo Finance
