SINGAPORE (Reuters) – Goldman Sachs (NYSE: ) raised its forecast for Brent crude futures after a surprise announcement from OPEC+ to agree to further production cuts.
Analysts at the bank said in a note on Sunday that Brent crude for December 2023 rose $5 to $95 a barrel, while the forecast for December 2024 was raised $3 to $100 a barrel.
The cut in price forecasts came as the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia cut its forecast for production from OPEC+ by 1.1 million barrels per day by the end of 2023.
After the OPEC+ announcement, Brent crude futures rose to their highest level in nearly a month in early trading on Monday, above $86 a barrel.
“Today’s sudden (production) cut is consistent with OPEC+’s new approach, as it can be done without significant market share losses,” the bank said.
While the move was surprising, he said, the decision reflected important economic and potentially political considerations.
The bank estimates that cutting production could provide a seven percent increase in oil prices, which would contribute to increasing revenues for OPEC+.
The bank pointed out that the OPEC+ decision came after the US and France announced they would release stocks from their strategic petroleum reserves.
“The refusal to replenish US strategic petroleum reserves in fiscal year 2023, despite WTI (the US benchmark) reaching low levels described as sufficient for replenishment, may also have contributed to OPEC+’s cutback decision,” he said. .
(Prepared by Mahmoud Salama for Arab Bulletin)
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