Here’s What Goldman to UBS Say About Oil After Big OPEC+ Cut

(Bloomberg) — The OPEC+ alliance agreed to its biggest production cut since the start of the pandemic in Vienna on Wednesday, a move that drew swift rebuke from the U.S. and prompted Goldman Sachs Group Inc. to increase its price forecast for the global benchmark. Brent crude this quarter.

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Here’s what leading analysts had to say about the oil market after the group pledged to cut output by 2 million barrels a day from November:

Morgan Stanley

“Brent will reach $100 a barrel faster than we had previously estimated” after the OPEC+ move, Morgan Stanley analysts including Martijn Rats said in a note. The cut risks tightening markets significantly, although much depends on how Russian oil production fares after the European Union embargo takes effect, they said. The bank raised its Brent forecast from $5 to $100 for the first three months of 2023, while keeping its outlook unchanged for the following three quarters.

Goldman Sachs

“All the developments we’ve seen on the supply side right now very much set the stage for what we think will be higher prices later this year,” Damien Courvalin, head of energy research, told Bloomberg TV. The bank raised its Brent estimate for the fourth quarter by $10 to $110 a barrel.

UBS Group AG

The oil market is expected to tighten further and Brent will push above $100 in the coming quarters, analysts such as Giovanni Staunovo said in a note. The OPEC+ cut will combine with a European ban on Russian crude imports, the likely end of OECD strategic oil reserve releases and higher gas-to-oil demand this winter to tighten the market.

ING Group NV

The move is enough to dramatically change the balance sheet for next year, pushing the market into a deficit throughout 2023, Warren Patterson, head of commodities strategy at ING Groep NV, said in an interview in singapore There is a clear upside to the bank’s Brent forecast of $97 a barrel next year, he said. However, further issuances of US strategic reserves are considered possible, although they would likely have limited impact.

Citigroup Inc.

While the reduction is large on paper, the effective cut will be much smaller because the group is no longer meeting its quotas, analysts such as Francesco Martoccia and Ed Morse said in a note. The move could backfire on OPEC+ if it further affects economic activity and oil demand, they added.

RBC Capital Markets

The actual cut will likely be 1 million barrels a day, with Saudi Arabia accounting for more than half, analysts including Helima Croft said in a note. While the White House signaled that there could be more releases from the Strategic Petroleum Reserve, another blockbuster release is unlikely in the near term, they said.

SPI asset management

“The oil complex is busy assessing the complexity of the actual cut while also factoring in production-to-quota mismatches,” managing partner Stephen Innes said in a note. Brent crude could retreat above $100 in the coming quarters, he said.

(Add comments from Morgan Stanley)

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