NEW YORK (CNN Business) - Goldman Sachs is now calling for oil prices to hit $100 a barrel later this year and continue rising in 2023, signaling higher prices at the pump are on the way.
By summer, the bank expects oil inventories in advanced economies will sink to their lowest level since 2000.
That’s why Goldman now expects Brent crude, the world benchmark, will hit $100 a barrel in the third quarter of this year, up from the bank’s prior call for $80. Goldman sees Brent hitting $105 a barrel next year, up from a previous forecast of $85.
“Importantly, we are not forecasting Brent trading above $100/bbl on an argument of running out of oil as the shale resources is still large and elastic,” Goldman Sachs strategists wrote.
However, Goldman Sachs said shale oil will “likely require ever rising oil prices given the reluctance to invest in oil during the energy transition” and the gradual depletion of shale capacity over time.
Oil prices rose on Tuesday to fresh seven-year highs, dealing a blow to the Biden administration’s efforts to contain prices at the pump.
U.S. crude jumped 1.9% to finish at $85.43 a barrel, the highest close since October 13, 2014.
Brent crude, the world benchmark, gained 1.2% to $87.51 a barrel. It’s the first time Brent has finished above $87 since October 2014.
The latest milestones mean the oil market has completely recovered from both the US-led intervention into energy markets just before Thanksgiving Day and the scare delivered by the Omicron variant. Both of those forces drove energy prices lower in November and early December.
In the span of just seven weeks, U.S. crude has rallied 30% from its December 1 low of $65.57 a barrel.