Oil Price Forecast from Goldman Sachs - Nov 30

[dan_s]

This week’s prize riddle in commodities will be figuring out when and where the freefall in gold ends.

The other issue will be determining how quickly oil will get to $50 a barrel—and whether it’ll stay there or reverse as markets dial back some of the overrun in risk sentiment over potential COVID-19 vaccines.

Case in point: Citigroup sees support for gold emerging at $1,700 an ounce—about $75 below where it is currently trading—while Goldman Sachs projects oil will hit $65 per barrel in 2021.

Goldman said in the short-term, the oil market faced spreading lockdowns with demand declining in Europe and the range of infections likely asymmetric to the upside through the winter. It added:

“We expect this winter wave to generate a 3 million barrels per day hit to global oil demand, only partially offset by heating, emerging markets and restocking demand, although this demand hit has so far been masked by strong Asian crude buying and restocking.”

“We expect these muddied short-term fundamental signals and the opposite pulls of lockdowns vs. vaccines to keep oil prices volatile in coming weeks. These cross-currents will further complicate OPEC+’ decision this week to delay or implement its scheduled 1.9 mb/d January production increase.”

A lack of an OPEC+ extension representing $5/bbl downside from current spot levels on our modeling further contributed to short-term price gyrations, it said.

“Ultimately, these winter headwinds are just speed bumps on the path to a tightening oil market, with the winter COVID wave delaying but not derailing the oil market rebalancing, with normalized OECD stocks, OPEC+ spare capacity returning to 1Q20 levels and finally needed shale production growth all occurring by 4Q21."

“This leads us to reiterate our recommendations to be long Dec. 21 Brent forwards, our preferred expression of oil’s 2021 rally, as well as for producers to wait to hedge.”

Read more: https://www.investing.com/analysis/comm ... -200546237

[dan_s]

Global Oil Supply is going to decline and this world will soon need 100% of the oil that OPEC+ can produce.

Raymond James Energy Sector Update 11-30-2020:
"The oil crash exacerbated what had already been clear beforehand: 2020-2021 marks a trough for project startups, and looking ahead, there will be no realistic return to pre-COVID levels."

"This past February, just as COVID was starting to pressure oil prices - but before the epic March/April crash - we previewed global oil project startups
for the period 2020-2022. Needless to say, since then the industry experienced a collapse in capital spending to below the previous (2016) cyclical
trough. Today we provide an update on the status of long-lead-time oil projects around the world. After extending our analysis through 2024, the
key message is bullish for medium-term oil prices: at no point in the next four years will the pace of project startups return to where it was in
2019. Because the vast majority of the upcoming startups had been approved in the pre-COVID era, it is a good bet that there will be even fewer
startups in the latter half of this decade, with project development never fully recovering to pre-COVID levels. Alongside the spending collapse,
there is another headwind, and this one is even more structural and long-lasting: heightened concerns about the eventual peak in global oil
demand, in the context of decarbonization, and the resulting challenge of stranded assets."