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Oil prices rise more than 2% as Goldman sees supply deficit on summer fuel demand

In Business
June 10, 2024

Platform Eureka, an offshore oil and gas platform operated by Beta Operating Company LLC, off the coast of Long Beach, California, US, on Thursday, Nov. 2, 2023. 

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Crude oil futures rose more than 2% on Monday as analysts see summer fuel demand pushing the market into a supply deficit in the coming weeks.

Goldman Sachs analysts said Brent should rise to $86 in the third quarter as summer transportation and cooling demand pushes the market into a “sizeable” deficit of 1.3 million barrels per day, or bpd.

Here are Monday’s energy prices:

  • West Texas Intermediate July contract: $77.74 a barrel, up $2.21 or 2.93%. Year to date, U.S. oil has gained 8.5%.
  • Brent August contract: $81.63 a barrel, up $2.01, or 2.52%. Year to date, the global benchmark is ahead 5.9%.
  • RBOB Gasoline July contract: $2.41 per gallon, up 1.19%. Year to date, gasoline futures are up 14.6%.
  • Natural Gas July contract: $2.90 per thousand cubic feet, down 0.41%. Year to date, gas is up 15.6%.

Oil prices posted a loss last week after OPEC+ agreed to increase production from October through September 2025.

“The energy complex continues to recover from the OPEC+ announcement,” said Ryan McKay, senior commodity strategist at TD Securities. McKay said the agreement loosened the fundamentals, but prices should find some level of support given OPEC+ “are likely to avoid causing any major oversupply.”

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WTI vs. Brent

Goldman sees a $75 floor for Brent as lower prices promote demand and a $90 ceiling due to higher-than-expected global inventories and the OPEC+ production decision.

Long positions, or bets that futures prices will rise, are at the lowest level since 2011, while short positions are close to record highs, according to an analysis by UBS.

“We think this is overly pessimistic,” said UBS analyst Giovanni Staunovo. Inventories should start falling in the coming weeks and demand should increase by 2 million bpd to 2.5 million bpd through August.

Traders are looking ahead to the Federal Reserve meeting and inflation data on Wednesday, as well as to oil market reports from OPEC and the International Energy Agency on Tuesday and Wednesday.

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