Energy Spotlight: Oil down, gas up, but Goldman Sachs still sees $140/bbl looming

Fri 08 Jul 22, 3:14pm (AEST)
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Key Points

  • Brent Crude dipped below $100 multiple times this week
  • Gas did the opposite as European benchmarks soar again on Russian supply concerns
  • There is mixed analysis on whether “peak inflation” has been met with regards to the oil price as an indicator

Energy markets have been defined by a confusion of bullish sentiment this week as crude oil dipped below $100 multiple times, but gas prices gain strength in all major markets. 

The S&P/ASX 200 Energy Index is up 2.63% in mid afternoon trades on Friday but it has lost -2.08% over the week. 

Price headwinds

  • Lockdowns in China have again dampened expectations of a snapback in demand

  • The latest US EIA report showed crude inventories increased more than expected

  • Recession fears continue as Atlanta Fed data suggests the US has already entered one

  • Goldman Sachs predicts recessions in the UK, EU to follow

Price drivers

  • Perceptions Russia will limit exports of gas to Europe through the Nord Stream pipeline have been a boon for gas benchmark prices

  • Supplies have not greatly increased since last week when a narrative of supply tightness was more popular

  • An explosion disrupted a major Kazakhstan oilfield half-owned by Chevron this week that killed workers and will likely rejuvenate supply concerns

A look at movements in the Dutch TTF EU gas benchmark price
A look at movements in the Dutch TTF EU gas benchmark price (TradingEconomics)

Chinese lockdowns and a growing acceptance by market participants everywhere that recession is likely have depressed enthusiasm for the oil rally this week. 

While the price is back to $105/bbl this afternoon, oil dipped below $100 this week for the first time in months. 

That’s just for Brent - WTI (West Texas Intermediate) fell further, though still in the $90 range.

Gas, meanwhile, which had a tame week last week, is back to its March highs on concerns of Russian supply cuts. 

While the US natgas benchmark rally has been small in comparison, the UK Gas and Dutch TTF Gas benchmarks have spiked upwards dramatically, once again.

Goldman Sachs says the price of oil will hit $140/bbl and that recession won’t impact the likelihood of that, throwing into question whether or not <$100 oil indicates the worst of inflation is out of the way. 

US broadcaster CNBC ran those comments on Thursday. 

Of course, the one thing that will sort out inflation is a recession, but your feelings on that probably depend on where your money is. 

And, a fun fact: Norway, a region known for being full of fjords, is currently experiencing a drought, limiting hydropower output. 

And, a look at the shape of Brent Crude charts
And, a look at the shape of Brent Crude charts (TradingEconomics)

What to look out for next week 


  • Baker Hughes US rig count data

  • Chinese inflation rate 

  • Russian inflation rate 


  • NAB Australian business confidence data for June 

  • EU economic sentiment data 

  • Indian inflation rate


  • IEA Oil market report 

  • US inflation rate 

  • Westpac Australian consumer confidence data

  • Chinese year-on-year exports data for June 

  • German inflation rate 

  • UK GDP growth data for May (both MoM and YoY)

  • French inflation rate 


  • Australian consumer inflation expectations

  • EIA US natural gas stocks change data


Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication. Email Jon at [email protected].

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