Resilient crude oil demand in the world’s largest economies could lead to higher crude prices and stoke inflation
in the coming months, according to analysts including Goldman Sachs and oil executives, including ExxonMobil’s CEO Darren Woods. at the end of last month. in July, Goldman Sachs analysts wrote in a recent note. The Wall Street bank expects the robust demand to lead to a wider-than-expected market deficit of as much as 1.8 million bpd in the second half of 2023 and to 600,000 bpd deficit in 2024.
Market speculators have rushed to cover shorts on oil futures after the Saudis extended a one-month cut into a three-month cut and signaled the output reduction could be further extended or even deepened and extended. “The fact the bulk of recent aggressive fund buying in response to a +17% rally has been driven by short covering instead of fresh longs, show a current hesitancy about getting too extended,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, wrote in an “It highlights the risk when a rally is being driven by a political and economic motivated production cut, and not a sustained rise in demand driven increased economic activity,” Hansen added.
“With that in mind, we maintain our $80 to $90 price range forecast for the current quarter, unless the economic outlook counter to our expectations show signs of improving,” the strategist added. Still, if oil prices continue to rise, demand from major importers could falter compared to previous months. The specter of energy-driven accelerating inflation is looming.
“It would be foolish for any central bank to declare victory,” Randall Kroszner, a former governor of the US Federal Reserve System and now an economics professor at the University of Chicago Booth School of Business, told
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