Goldman Sachs flags demand weakness as key risk to oil price outlook
Goldman Sachs flags demand weakness as key risk to oil price outlook June 1 (Reuters) - Goldman Sachs said late Sunday that weak oil demand in China and Europe poses a major downside risk to its fourth-quarter Brent crude forecast of $90 a barrel and WTI forecast of $83, although Middle East supply disruptions could still push prices higher.
Here are a few details:
April retail sales data from China and Western Europe suggest roughly 2 million barrels per day of downside risk to Goldman Sachs' already conservative April oil demand estimates, potentially reducing its Brent price forecast by about $10 per barrel.
Weak demand for petrochemical feedstock across Asia is reflected in lower utilization rates at ethylene plants, softer chemical-sector industrial production in China and Japan, GS said, and flagged a year-on-year decline of 150,000 barrels per day in India's naphtha and LPG demand during April.
The brokerage said indicators for road fuel consumption remain weak in China and several European countries, although demand appears resilient in the U.S. and India.
The market has become more optimistic on the prospects for a potential long-lasting U.S.-Iran ceasefire, leading to reduced investor positioning and continued physical destocking ahead of the anticipated reopening of the Strait of Hormuz.
(Reporting by Noel John in Bengaluru; Editing by Sherry Jacob-Phillips)
((Noel.John@thomsonreuters.com;))
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