Oil prices are supported by strong European demand: Goldman Sachs (Product name: CL1:COM)

Oil prices are supported by strong demand in Europe, where consumption rose an estimated 100,000 barrels per day in February to 13.7 million barrels per day, according to analysts at Goldman Sachs Group. became.

The increase is in contrast to the central bank’s previous forecast that oil demand would fall by 300,000 barrels a day in February and 200,000 barrels a day for the year.

“One of the key questions about the global demand outlook is that demand in Europe, the third largest consumer after the United States and China, will decline due to the stagnation in the European economy,” said Daan Struiven, an analyst at Goldman Sachs. “Are we stabilizing as we emerge from the crisis, or are we recovering?” he said in a March paper. 31 reports.

Unexpectedly strong demand in Europe this year adds $5 per barrel to Goldman’s forecast for Brent crude (CO1:COM) to average $83 per barrel in the fourth quarter of this year. .

The bank’s “nowcast” model also predicts oil prices will rise $5 per barrel due to slower supply growth in the U.S. and $7 per barrel due to an extension of production cuts by the Organization of the Petroleum Exporting Countries and its allies through the end of the year. suggests that. These supportive factors more than offset persistent weakness in China, which has held prices down by $7 per barrel.

Brent futures (CO1:COM) are currently trading at around $88 per barrel.