Goldman Joins Chorus Calling for Higher Oil Demand for Power Use
(Bloomberg) -- Goldman Sachs Group Inc. sees an extra 650,000 barrels a day of crude demand later this year as utilities wrestling high natural gas prices switch to oil to fire power plants, head of energy research, Damien Courvalin said on Bloomberg TV Monday.
As the global natural gas crisis worsens, causing prices to spike to record highs, the company expects power switching to cause oil demand and oil prices to rise. Courvalin reiterated that the bank estimates Brent crude futures will rise to $90 barrel by the end of the year.
The energy crisis in Europe and China is rippling across the globe, sending prices for gas and oil surging and raising the specter of shortages in several countries. Last week Rystad Energy AS estimated that the winter crunch could add nearly 1 million barrels a day of oil demand by the year-end. Saudi Aramco earlier Monday said it is already seeing 500,000 barrels a day of additional crude consumption.
“We see it every winter, toward the end of winter, when you’re running out of gas. We see those spikes in oil burned,” Courvalin said. “On a global basis we could easily do at times maybe 1 to even 2 million barrels a day during a very cold wave.”
Natural gas and oil inventories are tight this year, although oil has more spare capacity than natural gas, as companies continue to recover from record losses in 2020, Courvalin said. Companies are answering to investors, unwilling to ramp up production and instead pay off debts.
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