Goldman Sachs hikes oil price forecasts to US$140

Goldman Sachs expects oil prices to hit US$140 in the third quarter of 2022 as structural shortages remain unresolved.

The investment bank forecasts oil prices to average US$135 in the second-half of 2022 and US$125 in 2023, a US$10 increase compared to previous forecasts.

Source: Goldman Sachs Investment Research

Here are some key points from today's note.

China rebounds

“Chinese oil demand has rebounded sharply from its lows, but we expect activity to remain impacted through to year end,” the analysts said.

The daily volume of Shanghai’s shipping and airline ports is recovering substantially, reaching more than 90% of pre-lockdown levels, according to the Shanghai Shipping Exchange. 

Lost production

European leaders expect to block most Russian oil imports by the end of 2022. Goldman expects significant export volumes to be redirected to China and India, but production losses - that have nowhere else to go - will be inevitable.

Source: Goldman Sachs Investment Research

Inelastic supply

Global supply has been unphased in the face of higher prices.

"Oil investors continue to only reward discipline, with the companies that exceed capex expectations selling off during the latest earnings season," said the analyst.

Quick glance at ASX-listed players

The most obvious and household oil and gas positioned to benefit from higher prices include Woodside Energy (ASX: WDS), Beach Energy (ASX: BPT) and Santos (ASX: STO).

Towards the more speculative end of town:

• Brookside Energy (ASX: BRK)

• Strike Energy (ASX: STX)

• Horizon Oil (ASX: HZN)

See a full list of ASX-listed oil and gas stocks here.