Goldman Sachs Says the Oil Rally Isn't Done Yet

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Despite the stunning surge in oil prices this year, Goldman Sachs says there is more to go for the critical energy commodity.

The firm’s analyst Damien Courvalin reaffirmed his second-quarter forecast of $67.50 per barrel of
Brent crude
oil.

“We continue to forecast further upside…driven by the combination of resilient demand growth exceeding low expectations and large supply curtailments from OPEC+,” he wrote on Tuesday. “Should oil demand growth come in line with our expectations, the greater supply losses leave risk that…spot prices rally even faster and higher than we forecast.”

OPEC+ is a 24-nation oil-producer coalition that includes Organization of the Petroleum Exporting Countries and nonmembers.

The price per barrel for Brent crude for April delivery rose 1.9% to $63.59 on Wednesday and is now up 18% so far this year.

Courvalin said the main OPEC oil producers are making deeper-than-expected production cuts. There is a risk Venezuela production may also deteriorate, he added.

On the flip side, the analyst is cautious on his outlook for oil prices in the second half of 2019 due to low-cost U.S. shale production that will come on line.

Write to Tae Kim at tae.kim@barrons.com