According to Goldman, the oil price is likely to rise to $100 per barrel. Nevertheless, the company believes that the economy is still on track for a soft landing, despite the increase in fuel prices. Goldman raised its Brent forecast for the next 12 months from $93 to $100 per barrel. The commodity has risen 30% since the end of June due to OPEC supply cuts and strong demand. Brent reached a high of $95.96 on Tuesday, its highest level since November 2022, before losing almost 0.9% to $93.52 on Wednesday morning. The company also raised its WTI price forecast for the next twelve months from $88 to $95 per barrel. WTI reached $93.74 on Tuesday, also its highest since November 2022. WTI prices fell almost 0.9% to $90.42 on Wednesday. Analyst Daan Struyven cited a modestly sharper inventory drawdown for the forecast increase, a trend he described as “lower for longer” supply. “The main reason is that significantly lower OPEC supply and higher demand more than offset significantly higher US supply,” Struyven said in a note on Wednesday. “Overall, we believe OPEC will be able to support Brent in the $80-$105 range in 2024 by leveraging robust Asia-focused global demand growth (1.8 million per day) and its pricing power assertively.” The sharp OPEC cut means Brent is unlikely to consistently fall below $80 a barrel next year, Struyven added. He also believes Brent prices are unlikely to sustainably rise above $105 a barrel next year. Higher oil prices have fueled inflation, raising market concerns. The consumer price index rose 0.6% month-on-month in August, the highest monthly gain of 2023. Energy prices contributed strongly to the increase, rising 5.6% month-on-month and including a rise in gasoline prices by 10.6%. Although Struyven recognizes the upturn in inflation and the effects on real income growth, he does not believe that rising energy prices will derail the soft landing. “Most of the oil rally is probably behind us,” Struyven said. “Oil pressures that have affected growth in the US and Europe are likely to remain subdued, and natural gas prices remain low.” — CNBC’s Michael Bloom contributed to this report.
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