Crude oil may have been on the rise in October, but Goldman Sachs’ most recent forecast has been adjusted to be significantly lower than expected by much of the world.
The firm’s analysts reduced their forecast for Brent crude for the fourth quarter of the year, shaving off $10 to settle at $100 per barrel. This adjusted forecast was made following speculation that Beijing may expand the reach of its exceptionally harsh zero-COVID policy throughout China in light of an increasing number of cases.
In recent weeks, China has reported its first COVID-related deaths in six months. The national government has since tightened lockdown measures in several major cities.
Meanwhile, the prices for both Brent and WTI crude mostly remained static following volatile trading throughout Monday, November 21. Both barely shifted after moving into the $5 range, though Brent dropped for a moment following a Wall Street Journal report claiming that the Organization of the Petroleum Exporting Countries and their allies (OPEC+) was on the verge of announcing an increased output of 500,000 barrels daily.
However, a representative for the Saudi Arabian government denied this and declared that the present cut of two million barrels a day from production is expected to run until the end of next year. The United Arab Emirates also denied changes to any previous agreements made by OPEC+ members.
According to experts, the fluctuation of crude prices throughout the trading day is a sign that contradicting headlines still have the power to influence which way market prices will jump. Indeed, recent market volatility is at its highest since June of this year when G7 nations began to discuss the possibility of putting a price cap on Russian oil.
At the beginning of the fourth quarter, OPEC+ nations, including Russia, agreed to cut their overall production by two million barrels a day. However, this has not kept the European Union from enforcing a ban on Russian seaborne flows as one of the economic sanctions imposed as a protest against Russia’s invasion of Ukraine.
Another reason for the recent adjustment in Goldman Sachs’ Brent crude forecast for Q4 is the impending price-cap plan set for implementation by member-nations of the Group of 7 (G7.) G7 officials are slated to make an announcement regarding the exact level of the said price cap by Wednesday, November 23rd. This, too, is an organized response against the Russians’ ongoing occupation of their Balkan neighbor.