Goldman Lift '21 Oil Price Forecasts, Recommend Longs/Consumer Hedges

Goldman Sachs "now forecast that oil prices will rally sooner and higher, driven by lower expected inventories and higher marginal costs - at least in the short run - to restart upstream activity. We further believe that this additional rally will be supported by the current repositioning for a reflationary environment with investors turning to oil, buying a lagging real asset that benefits from a stimulus driven recovery and has demonstrated an unmatched ability to hedge against inflation shocks. We now forecast Brent prices will reach $70/bbl in 2Q21 and $75/bbl in 3Q ($10 above our prior forecasts). We expect this rally to be driven by both rising long-dated prices as well as a sustained steep level of backwardation. This leads us to recommend investors go long either (1) a front-month rolling index to capture a cross-asset high 10% level of annualized carry, or (2) the Dec '21 Brent future position that we first recommended last August. We in turn recommend consumers restart hedging forward price exposure while producers wait to add to hedges."