“Net, our bullish view remains unchanged: the oil deficit remains unresolved, the current strength in oil demand remains a near-term tailwind and the increasingly structural nature of the deficits will require much higher long-dated oil prices,” Goldman analysts including Damien Courvalin wrote in a note on Thursday.
OPEC and its allies on Thursday approved a 400,000 barrel-a-day output hike for December, despite pressure from major oil-consuming countries to boost supply even more. Now, the U.S. is expected to release supplies from its emergency reserves as it attempts to curb the surge in crude and gasoline prices.
UBS Expects Brent to Reach $90 With Market Undersupplied
Goldman said a potential release may only be a temporary help and could even backfire next year. If crude prices weaken dramatically, shale producers will not be so willing to increase drilling, leading to an even bigger supply shortage. The threat of more U.S. crude and the potential resumption of Iran nuclear talks are also factors to upcoming higher price volatility.