Goldman Sachs reiterated its confidence in its forecast for Brent crude oil prices despite potential challenges ahead. The investment bank remains "comfortable" with its prediction that Brent crude oil prices will range between $70 and $90 per barrel this year.
Potential weakness in demand and surge in sales of electric vehicles in China
The analysts at Goldman Sachs recognize that there may be some weakness in oil demand due to a softer economy and the increasing popularity of electric vehicles (EVs) in China. They estimate a downside risk of 600,000 barrels per day (b/d) on Chinese oil demand in the fourth quarter.
Factors influencing Chinese oil demand
Goldman Sachs attributes 300,000 b/d of the potential softening in Chinese demand to "bearish conversations with China oil consumers" and another 300,000 b/d to the continued strong sales of EVs. According to the bank's own research and the International Energy Agency forecasts, it is believed that EVs and plug-in hybrid EVs will account for 40% of domestic auto sales in China by the end of the year.
No changes to long-term forecast
Despite the challenges, Goldman Sachs maintains its 2024 Brent price forecast and highlights several positive factors contributing to their perspective. These include a potential increase in demand from Chinese petrochemical manufacturers, ongoing production cuts by OPEC+, and geopolitical tensions.