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Olechnowicz: I think we will have PLN 10 per liter of fuel
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Oil it is too little in relation to the returning and growing demand – so it will become more expensive. This is the opinion of the analysts of the Goldman Sachs bank, who w the latest The analysis explains why they have raised their raw material price forecasts. In the second half of this year and the first of next year, a barrel of Brent (European) oil is expected to cost 135 dollars. This is $ 10 more than the bank’s experts previously assumed.
Crude oil will not be cheaper. Goldman Sachs raises forecasts
$ 135 is the average price for several quarters, in shorter periods it may be even higher. In the fall (in the third quarter) of this year, it could reach $ 140 a barrel for Brent crude oil (previously $ 125 was expected) and $ 137 a barrel for US WTI crude oil (previously 119).
Here’s an important caveat: For these forecasts, Goldman Sachs writes about the spot price (that is, at the moment, with immediate payment). On the other hand, the charts that we usually follow are the quotations of a futures contract for crude oil (by buying such a contract the investor “blocks” the price for the future). The latter have a lower price (by a few dollars per barrel). This is what Brent crude oil has been trading since the end of December:
Brent crude oil futures quoted. source: investing.com
Here is the chart for WTI crude oil for the same period:
Crude oil futures quotes of the WTI type. source: investing.com
Both types have been trading around $ 120 a barrel in recent days. On Wednesday afternoon (after 5:00 p.m.) they even exceed this level, increasing by about 1.5 percent to USD 122 for Brent crude oil and 121 percent for Brent crude oil. when it comes to WTI crude oil.
The Goldman Sachs forecast rose because there is a structural deficit in the oil market – demand exceeds supply. On the one hand, we have the war in Ukraine and the expected reduction in oil production in Russia.
In addition, the situation in China is changing. Recently, the “zero COVID” policy, leading to various types of lockdowns affecting the economy (and thus also reducing the demand for oil), partially eliminated supply problems on the oil market. Now demand from China is recovering, and higher demand (after all, we are talking about the second largest economy in the world) translates into higher prices. In addition, we still have extremely low stocks of both crude oil and ready-made fuels – gasoline.
“Supply remains inelastic,” analysts write, adding that “the global economic slowdown has proved insufficient to restore the balance of stocks at the current prices.”
Fuel prices are rising more than crude oil prices would suggest
Interestingly, the analysis also says that retail prices this summer will reach levels normally associated with Brent crude oil prices of $ 160 per barrel. Why should the fuel be so expensive as if crude oil were to cost $ 160, despite the fact that the price of the raw material is expected to reach $ 140? According to Goldman Sachs, among others due to the situation on the wholesale market. As it is no longer possible to increase the capacity of crude oil processing in refineries (because it is the maximum), and the costs of the raw material and its transport are increasing, refining margins (the difference between the wholesale price of fuel and the price of crude oil) are at record levels. Prices in some countries may also be raised by a higher rate of the dollar against local currencies.
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So far, the price increases at the stations do not discourage consumers from drastically reducing fuel purchases – and we are talking about record levels in some countries, because it is very expensive in Poland (although if we “remove” the anti-inflation shield effect, i.e. lower VATwould be much worse), but the historically highest gasoline prices are also recorded in the United Kingdom and the United States.
Goldman Sachs analysts note that the decline in demand seems to affect mainly those who refuel diesel oil, i.e. companies – because they use diesel-powered trucks, generators, etc. because data for the last weeks is not available yet. So so far we are seeing slowing activity in the European industry and hitting disruptions in global supply chains (due to Chinese lockdowns). Consumers, on the other hand, still have a lot of free cash to spend and are not giving up driving for now. Of course, we are talking about the global perspective all the time.
