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The average U.S. gasoline price at the pump dropped below $4 per gallon this week, but Goldman Sachs sees the price surging back to $5 by the end of the year while Brent crude climbs back to $130 a barrel, as the market still needs to balance rising demand and tight supplies.
These are the levels “at which we need to see sustained prices to eventually solve the market deficit,” according to Goldman’s head of energy research Damien Courvalin.
Goldman sees crude demand poised to rise as economies continue to reopen, and as power generators and industrial producers switch from pricier natural gas, while supply is constrained by the lack of an inventory buffer for gasoline and diesel as refiners head into their maintenance season.
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The forecast is part of a broader warning from Goldman of a commodities market that appears to “hold irrational expectations, as prices and inventories fall together, demand beats expectations and supply disappoints,” Goldman’s head of commodities research Jeffrey Currie said this week.
Brent crude rose 3.4% during the past week to settle at $98.15/bbl and WTI gained 3.5% to $92.09/bbl.
Image and article originally from seekingalpha.com. Read the original article here.