Oil storage tanks stand at the RN-Tuapsinsky refinery, operated by Rosneft Oil Co., at night in Tuapsa, Russia.

Andrei Rudakov | Bloomberg | Getty Images

Goldman Sachs expects record demand in oil markets to drive oil prices higher in the near term.

“We expect fairly significant deficits in the second half, with deficits of close to 2 million barrels per day in the third quarter as demand reaches an all-time high,” Goldman’s head of oil research Daan Struyven told CNBC’s “Squawk Box Asia” on Monday.

He added that the bank is forecasting Brent crude to rise from just above $80 a barrel now to $86 a barrel by the end of the year.

Global benchmark Brent futures is trading 0.39% lower at $80.75 a barrel, while the US West Texas Intermediate Futures were up 0.42% at $76.75 a barrel.

“Increased demand uncertainty”

Struyven acknowledged that U.S. oil production has risen significantly over the past year to 12.7 million barrels per day, but said the rate of growth will slow through the rest of 2023.

“We expect U.S. oil supply growth to slow considerably from here to a sequential pace of just 200 barrels per day,” he said, pointing to the decline in the rig count. This metric, which corresponds to the number of active oil rigs, is used as an indicator of drilling activity and future production.

The U.S. oil rig count recently hit a 16-month low, down 15% from the end of 2022, a recent Goldman report observed, citing data from Baker Hughes and Haver.

Baker Hughes reported last week US oil rigs fell by 7 to 530, the lowest since March 2022.

Struyven suggested the lack of agreement after the G20 energy ministers’ meeting indicated “very substantial” uncertainty about long-term oil demand.

A group of 20 energy ministers met in India at the weekend but left without reaching a consensus on phasing out fossil fuels, complicating the transition to clean energy.

“The key point for investors is that uncertainty around oil demand is so high that investors may require a premium to offset the increased risk from such increased demand uncertainty,” Struyven said.

In June, the International Energy Agency had they predicted that global oil demand would increase by 2.4 million barrels per day in 2023, surpassing the increase of 2.3 million barrels per day in the previous year.

International Energy Forum secretary-general Joseph McMonigle predicted at the weekend that both India and China would reach 2 million bpd in the second half of 2023 as demand picks up.

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