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The Goldman Sachs Group Analysts Changed their Long-term oil Outlook

3/20/2023 12:40 PM

Benchmark Brent Crude Oil prices are correcting amid declining investor interest and are currently trading just above 72.00.

Last week there, were serious changes in the capital balance. As you know, there are only three main assets in which most market participants keep their funds: oil, gold, and the US dollar. If one of them is rapidly adding in value, the other two will react to the dynamics with a fall due to the outflow of investment capital, which is now observed: the precious metal quotes are showing an upward trend, acting as a catalyst for reducing liquidity in oil quotes and the US dollar and, as a result, to their weakening.

Against this background, analysts from The Goldman Sachs Group Inc. changed their long-term forecast, noting that they no longer see prospects for the strengthening of oil quotes above 100.0 dollars per barrel in 2023. In their opinion, the expected increase in oil production by OPEC countries, originally planned for the second quarter, will be postponed to the third quarter of 2024, which will not allow the instrument to continue moving above 94.0 dollars per barrel. For next year, experts are setting an average price of 97.0 dollars per barrel amid a possible revision of the parameters of the OPEC+ deal, which now involves a reduction in production by 2.0M barrels.

On the daily chart, the trading instrument is falling within the global downward corridor with dynamic boundaries of 85.00–64.00.

Technical indicators strengthen the sell signal: fast EMAs of the Alligator indicator move away from the signal line, and the AO histogram forms downward bars, falling in the sell zone.

Resistance levels: 74.10, 79.50. | Support levels: 70.50, 63.00.

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