The V-shaped recovery in the oil patch continues to take even the biggest bulls on Wall Street by surprise.
Goldman Sachs ramped up its already optimistic forecast on Sunday, calling for Brent crude to hit $90 a barrel by the end of the year. That’s up from its previous call for $80. The Wall Street bank expects US crude to hit $87 a barrel, up from $77 previously. “While we have long held a bullish oil view,” Goldman Sachs strategists wrote in a note to clients, “the current global oil supply-demand deficit is larger than we expected.” The firm said the recovery in worldwide demand from the Delta variant has been “even faster than our above consensus forecast” and global supply is “short of our below-consensus forecasts.”
In other words, high oil prices could get even higher. That suggests gasoline prices may remain elevated. The national average stands at $3.19 a gallon, according to AAA. That’s up from $3.15 a month ago and $2.19 this time last year. Brent crude, the world benchmark, jumped another 1.5% to $79.25 a barrel on Monday. That leaves Brent on track for its highest close since October 2018. US crude climbed 1.7% to $75.27 a barrel, on pace for its highest settle in nearly three years. The latest gains add to the remarkable recovery from the onset of Covid, when US crude crashed below zero for the first time ever. Oil bottomed at negative $40 a barrel in April 2020, or roughly $115 below current levels.