Oil23 Oct 2021 16:17
Wall Street Heavyweights: High Oil Prices Here to Stay
The high oil price will persist for a long time to come. It tracks several of Wall Street's heavyweights, Bloomberg reports.
the high oil price should not only be seen as a temporary peak - at least not if one is to believe the forecasts from some of Wall Street's heavy investment banks.
Goldman Sachs predicts that oil prices will remain around $ 85 a barrel in 2023.
"My advice to customers is to be invested in oil until we see where the equilibrium price is," says Jeff Currie, the bank's head of commodity analysis, referring to the price level at which new production capacity is put into operation.
We know that it is above these price levels because we have not seen a large increase in investments and capital expenditures ", he says to Bloomberg.
Another Wall Street banker, Morgan Stanley, this week raised its long-term oil price forecast to $ 70 a barrel, up from the previous $ 60 a barrel. BNP Paribas, on the other hand, expects an oil price of around 80 dollars a barrel in 2023.
Bloomberg notes that the market's focus on the climate issue has greatly reduced the willingness to invest in fossil energy. A telling example is when the oil and gas company EOG Resources announced plans for increased production in February. The market then responded by sending down the share most of all S&P 500 companies on the trading day.
The reluctance to invest in increased production has meant that the loss caused by the corona crisis has not yet been made up. The number of active oil and gas rigs is still 30 percent below the number at the beginning of 2020.
However, not all Wall Street banks expect persistently high oil prices. In an October report, Citigroup states that an oil price below $ 30 a barrel or above $ 60 is not sustainable in the long run.
According to the bank's analysts, a prolonged price level above $ 50 a barrel could lead to an increase in supply by a further 7 million barrels a day.
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