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Oil prices are being supported by persistent demand in Europe, with consumption in the region rising from a year earlier by an estimated 100,000 barrels a day to 13.7 million barrels a day in February, analysts at Goldman Sachs Group said.
The increase contrasts with the bank’s prior forecast of a decline in oil demand of 300,000 barrels a day in February, and by 200,000 barrels a day for the entire year.
“One key question for the global demand outlook is whether demand in Europe — the third largest consumer after the US and China — is stabilizing or even recovering as the European economy exits stagnation,” Daan Struyven, analyst at Goldman Sachs, said in a March 31 report.
Surprisingly stronger demand in Europe for the year would add $5 a barrel to Goldman’s estimate of $83 a barrel on average for Brent crude (CO1:COM) in the fourth quarter of this year.
The bank’s “nowcast” model also suggests that softer supply growth in the United States adds $5 a barrel to oil prices, and extended cuts by the Organization of the Petroleum Exporting Countries and its allies through the end of the year adds $7 a barrel. These supportive factors more than offset persistent weakness in China that suppresses prices by $7 a barrel.
Brent futures (CO1:COM) currently trade at about $88 a barrel.
