Oil futures rose on Friday, as Asian equity markets rallied on news that North Korean leader Kim Jong-un will meet US President Donald Trump. South Korea’s national security chief said on Thursday, after briefing White House officials on the talks between Seoul and Pyongyang, that the two presidents are likely to meet by next May. He also added that Kim has vowed not to conduct further nuclear or missile tests.
The White House said that Trump would accept the invitation, at a time and place to be later determined. As a result, Asian stocks and oil futures rose. Brent crude futures were priced $63.79 a barrel, an 18 cents increase, or 0.3 percent. US WTI crude futures were $60.25 a barrel, increasing by 13 cents, or 0.23 percent.
Goldman Sachs Group and Goldman Sachs, the world’s largest oil and gas producer, are forecasting oil demand growth in 2018 at 1.85 million bpd. This is despite recent signs of a slight slowdown, attributed to strong performance at the beginning of the year and accelerated demand in the second quarter of the year. Analysts said that “the January oil data indicate a strong growth of global demand in line with the strong economic momentum with the entry of 2018.”
Goldman Sachs attributed the recent drop in oil prices to seasonal factors, saying the data for the last ten years indicates that weak demand may be present in the first quarter, after previously being in the second quarter.
While an economic data set was published last week, and fell below market expectations, which may cause trade disputes and oil demand dues to weaken, the effect is likely to be gradual and may be offset by a weaker dollar, the bank said. “We still expect the overall macroeconomic situation in 2018 to continue to support oil demand, and our forecast for demand growth in 2018 will remain at 1.85 million bpd, well above the average forecast”, Goldman analysts said.
The outlook for demand exceeds the growth of shale oil producers and other non-OPEC producers and will lead to further declines in stocks in the third quarter below the five-year average, resulting in a new price rally, the bank said.
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