Those hoping for petrol prices to fall may be in for a long ride

For Australian motorists hoping to see petrol prices start to fall they may be in for a long wait according to new analysis and an aggressive stance from OPEC.

Leading global investment banking, securities and investment management firm Goldman Sachs has forecast that oil is on its way to approximately US$100 per barrel.

The company has lifted its estimated peak for the next 12 months from around US$93 per barrel due to reduced supply from OPEC and rising demand.

Those two measures are expected to more than offset an increase in oil supply coming from the US.

Goldman Sachs’ head of oil research, Daan Struyven, has tipped that OPEC will probably be able to keep Brent crude prices in a range of US$80 to US$105 next year.

Mr Struyven said “lower for longer” supply from Saudi Arabia and its OPEC+ partners is the main reason for the forecast change.

He noted that Saudi Arabia’s recent production announcement signals its “strong determination to drive down inventories and push up prices.”

US production

A new report says OPEC is likely to reduce its oil production for longer because of more supply coming from outside the organisation — most notably from the US.

Goldman Sachs noted that supply constraints for parts, rigs, and workers have eased in the US, and producers are drilling and completing wells more quickly with more powerful rigs with less downtime.

Prices will also be pushed up by rising global demand for oil in 2024 led by Asia, as the slowdown in China’s economy shows signs of “bottoming out.” India and the Middle East are also expected to have large increases in demand.

However, in what is some good news, Goldman Sachs says the rise in energy prices isn’t expected to derail a soft economic landing for the US economy.

OPEC plays down IEA demand predictions

Meanwhile, OPEC says that consistent and data-based forecasts do not support the International Energy Agency’s (IEA) recent assertion that fossil fuel demand would peak before 2030.

An aggressive OPEC declared it was an extremely risky and impractical narrative to dismiss fossil fuels, or to suggest that they are at the beginning of their end.

“In past decades, there were often calls of peak supply, and in more recent ones, peak demand, but evidently neither has materialised. The difference today, and what makes such predictions so dangerous, is that they are often accompanied by calls to stop investing in new oil and gas projects,” OPEC secretary general, Haitham Al Ghais, declared.

“Such narratives only set the global energy system up to fail spectacularly. It would lead to energy chaos on a potentially unprecedented scale, with dire consequences for economies and billions of people across the world.”

“This thinking on fossil fuels is ideologically driven, rather than fact-based. It also does not take into account the technological progress the industry continues to make on solutions to help reduce emissions. Neither does it acknowledge that fossil fuels continue to make up over 80% of the global energy mix, the same as 30 years ago, or that the energy security they provide is vital.”

Overnight prices up

Overnight crude oil prices activity has highlighted the current robustness of the global crude market.

Oil fell below US$90 per barrel in early trading session before recovering back to US$93 per barrel.

In his ANZ Market Wrap, analyst Daniel Hynes reported that Saudi Arabia extended its voluntary oil production cuts to the end of this year, producing 2 million barrels per day less than a year ago.

In addition, a recent Russian exports ban on gasoline and diesel means upward pressure on crude oil demand from refineries.