Goldman Sachs announced late Sunday that weak oil demand in China and Europe poses a significant threat to its forecast of $90 a barrel for Brent crude and $83 for West Texas Intermediate crude in the fourth quarter, although supply disruptions in the Middle East may continue to push prices higher.
April retail sales data from China and Western Europe point to a downward revision of about 2 million barrels per day to Goldman Sachs’ already conservative forecast for oil demand in April, which could mean a reduction of its forecast for the price of Brent crude by about ten dollars per barrel.
The bank explained that weak demand for petrochemical raw materials across Asia is reflected in lower utilization rates at ethylene plants and a decline in industrial production in the chemical sector in China and Japan.
He noted a 150,000 barrel-per-day drop in Indian demand for naphtha and liquefied petroleum gas during April on an annual basis.
He said that vehicle fuel consumption indicators remain weak in China and several European countries, although demand appears robust in the United States and India.
The market has become more optimistic about the prospects for a long-term ceasefire between the United States and Iran, leading investors to reduce their positions and continue to decline physical stockpiles ahead of the expected reopening of the Strait of Hormuz.
