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Oil Prices Supported by Slower US Supply Growth in 2024: Goldman Sachs

OIL

US liquids growth is expected to slow in 2024 to 600kb/d compared to 1.4mb/d in 2023 amid ongoing capital discipline according to Goldman Sachs.

  • The Permian basin has driven all growth in US supply since early 2020 but well productivity in the key growth region is no longer increasing.
  • US remains a key short-term marginal oil producer, where flexible short-cycle private producers sit high on the global cost curve.
  • The slower US supply supports a Brent forecast of 100$/bbl in June. A 10% increase in oil price is forecast to boost US liquids supply by around 1%, or 200k b/d.
  • The US supply response to higher prices caused by any geopolitical supply shock is expected to only offset ~20-25% of initial shock and with a delay of about two quarters.
  • Physical or political barriers to accessing spare capacity are the key upside risk to oil prices despite almost 4mb/d of current OPEC spare capacity.
Energy BulletsCommoditiesUS
Energy BulletsCommoditiesUS

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