Before I catch up on Goldman Sachs, these the items from yesterday on Biden's SPR release that triggered the big drop in oil prices:
- More on the Biden oil reserve release, up to 180m barrels over several months
- International Energy Agency calls an emergency ministerial meeting to discuss oil supply
- ICYMI - US President Biden is said to be preparing a massive release of oil stockpiles
- Biden admin is considering a 'massive' oil release to fight inflation
And, from Justin in the aftermath:
And, from the US day on Thursday:
- US to release 1 million barrels a day from SPR over the next six months - statement
- Biden begs oil companies to produce more
OK, now from Goldman Sachs, this in summary:
- Goldman said Biden's 180mn barrel release would help the oil market rebalance in 2022
- increasing supply by 1 million b/d for six months
- GS dropped its H2 2022 Brent forecast by $15/bbl to $120/bbl
And added that the extra supply would "not resolve the structural supply deficit, [that has taken] years in the making." Which seems obvious. GS go on:
- "In fact, lower prices in 2022 would support oil demand while slowing the acceleration in shale production, leaving for now a deficit in 2023, as well as the likely requirement to refill the SPR"
GS reason that the release, in lowering prices, would therefore lower the incentive for shale producers. This is micro-economics 101 so it should not be news to anyone.
- could raise its 2023 Brent oil prices $5/b above its current $110/b forecast for the year, reflecting higher demand and lower shale supply exiting 2022
Oil update, the arrow is to the news impact yesterday.
