Goldman Sachs raises its forecast for oil prices after the OPEC decision – E24

US investment bank Goldman Sachs raised its fourth-quarter North Sea (Brent) oil price forecast by $10 a barrel to $110 a barrel, according to a note from several analysts, Bloomberg reported.

The adjustment comes as a result of the OPEC+ decision to cut oil production by 2 million barrels per day from November.

The memo indicates that OPEC+ plans to cut production by 2 million barrels per day amount to a real decrease of 1.2 million barrels per day compared to the bank’s forecast for November.

Just after 10 p.m. Wednesday, a barrel of North Sea oil was trading for $93.59.

I think the cut makes sense

– If the reduction plans continue beyond December 23 next year, the price of Brent oil is likely to rise by $ 25 from our previous forecast of $107.5 per barrel. The price is likely to rise further if the shares are completely emptied, the investment bank said, according to Bloomberg.

Goldman Sachs believes the cut makes sense, albeit exceptional, as it increases the oil group’s revenue with minimal sacrifice of future profits.

The bank also wrote that it expects reactions from the US after the planned production cuts by the oil group.

Biggest production cut since 2020

The Organization of the Petroleum Exporting Countries and its partners decided on Wednesday to cut oil production by two million barrels per day.

The reason for the cut is an attempt to reduce the decline in oil prices caused by the weakness of the global economy.

This is also the largest drop in production from OPEC+ since 2020, according to Bloomberg.

The cut is likely to have less impact on global supplies than production cuts might suggest, according to the news agency. Many member countries are already producing well above their quotas, which means they will already be in compliance with the new limits without having to cut production.