Energy Prospectus

Goldman sticks with $70-$75 2Q forecast. Goldman Sachs acknowledged the upside risk to oil prices from Iran sanctions, but nonetheless stuck with its second quarter forecast for Brent to trade within a $70-$75 per barrel range. “Given our confidence in better supplied markets next year and the still high uncertainties around the aggregate OPEC+ production path in coming months, we are, however, not changing this forecast for now,” the investment bank said in a note.

India and China may defy sanctions. The two top buyers of Iranian oil may not obey U.S. sanctions. “Iranian exports will not actually reach zero,” analysts at Eurasia Group said in a research note published Monday. “China, which imports approximately 500,000 bpd (barrels per day), will make considerable cuts in the near term. For Beijing, securing the trade agreement with the U.S. is the top priority, and China will not link Iran oil imports to the trade talks.”

Raymond James is holding with their forecast that WTI will average $75/bbl in Q4 2019 and $90/bbl in Q1 2020. The spike in Q1 2020 is because RJ thinks that IMO 2020 regs will make the global oil market super tight next year.

Raymond sent out a special report today on their take on the impact of the increase sanctions against countries that import Iranian crude oil.
"We believe Saudi will increase supply but only after Brent oil prices move above $80/bbl (or about $5/bbl higher than current prices). Why? As we discussed earlier this year, Saudi needs Brent in the $80s from an all-in fiscal breakeven standpoint. Put simply, Saudi would rather give up a bit of market share in exchange for a more constructive oil price environment. Investors should also realize that any meaningful increase in Saudi production would not likely show up in U.S. oil inventories until two months later (i.e., September)."

If you'd like to see the new RJ report. send me an email (dmsteffens@comcast.net).