Goldman Sachs sees 'high probability' of OPEC cut — and expects oil prices to hit $110 next year

A radical of immoderate of the world's astir almighty lipid producers is highly apt to instrumentality further measures to stem a terms diminution and effort to equilibrium the market, according to Goldman Sachs.

OPEC and non-OPEC producers, an influential vigor confederation known arsenic OPEC+, volition convene successful Vienna, Austria connected Dec. 4 to determine connected the adjacent signifier of accumulation policy.

It comes amid recession fears, weakening crude request successful China from renewed Covid-19 lockdowns and arsenic marketplace participants measure the looming interaction of a Western terms headdress connected Russian oil.

Jeff Currie, planetary caput of commodities astatine Goldman Sachs, said Tuesday that a operation of factors had led the slope to downgrade its lipid terms forecasts successful caller months.

"First and foremost, it was the dollar. What is the explanation of inflation? Too overmuch wealth chasing … excessively fewer goods," Currie told CNBC's Steve Sedgwick astatine Goldman Sachs' Carbonomics league successful London.

The 2nd origin "has to bash with Covid and China — and by the way, it's big," helium continued. "It's worthy much than the OPEC chopped for the period of November, let's enactment it successful perspective. And past the 3rd origin is Russia is conscionable pushing barrels connected the marketplace close present earlier that December 5th deadline for the export ban."

Currie said the medium-term lipid outlook for 2023 was "very positive" and the slope plans to "stick to our guns" with a $110-a-barrel Brent crude forecast for adjacent year.

He acknowledged, however, that there's "a batch of uncertainty" ahead.

Oil prices person fallen successful caller months. International benchmark Brent crude futures, which stood astatine $100 a tube successful precocious August, traded astatine $85.46 a tube connected Tuesday day successful London, up 2.7% for the session.

U.S. West Texas Intermediate futures, meanwhile, traded astatine $79.09 a barrel, up implicit 2.4%.

"Demand is astir apt heading southbound again successful China fixed what's going on," Currie said.

"I deliberation the cardinal constituent with China close present is the hazard that you get a forced reopening. That means it'll beryllium self-imposed lockdowns wherever radical don't privation to get connected trains, don't privation to get to enactment and request goes further south."

Currie said OPEC producers volition request to sermon whether to accommodate further weakness successful request successful China.

"I deliberation determination is simply a precocious probability that we bash spot a cut," helium added.

OPEC+ agreed successful aboriginal October to trim accumulation by 2 cardinal barrels per time from November. It came contempt calls from the U.S. for OPEC+ to pump much to little substance prices and assistance the planetary economy.

Led by Saudi Arabia and Russia, OPEC+ slashed output by a grounds 10 cardinal barrels per day successful aboriginal 2020 erstwhile request plummeted owed to the Covid-19 pandemic. The lipid cartel has since gradually unwound those grounds cuts, albeit with respective OPEC+ countries struggling to fulfill their quotas.

OPEC+ has precocious hinted it could enforce deeper output cuts to spur a betterment successful crude prices. This awesome came contempt a study from The Wall Street Journal suggesting an output summation of 500,000 barrels per time was nether treatment for Dec. 4.