The head of energy research at Goldman Sachs pointed out that the oil prices may remain at a higher level for the next several years due to the persistently constrained supply, despite rebounded demand.
Damien Courvalin, senior commodity strategist at Goldman Sachs, commented that the fundamentals of the market will ensure higher prices for petroleum. He then said, “This is not a transient winter shock like it could be for gas. This is actually the beginning of a material repricing higher for oil.”
Goldman Sachs projects that Brent Oil will arrive at US$90/barrel, while Courvalin expects the product to sit at US$85/barrel in the future.
Courvalin believes that the petroleum market is currently at the longest void in decades, and the demand for the product during wintertime will continue to exceed the provision. Simultaneously, the supply of upstream petroleum is exceedingly insufficient in investment, which means that the prices will remain at a high level within the next year.
Courvalin commented that the constantly rising coal prices also serve as a warning for petroleum, since oil drilling activities have yet to fully recover provision amidst the rapid growth in demand, and now the market is facing a prolonged void. “We’re facing potential multi-year deficits and the risk of significantly higher prices,” said Courvalin.
As pointed out by Courvalin, the world must understand that the transition to clean energy would take a very long time, and the propaganda against the investment in hydrocarbons will only result in incessantly surging energy prices for the next several years.
Courvalin forecasts the demand for petroleum to hit record high in 2022 and 2023, and the market fundamentals will continue to provide a support for the exorbitant oil prices, as it has been this way since 2014.
(Cover photo source: pixabay)