Goldman Sachs analyst Damien Courvalin said Monday that gasoline prices could spike this summer because low supplies leave open the possibility of a possible shock, like were experienced in 2008 and in the 1970s.
Goldman’s head of energy research and senior commodity strategist told CNBC that a “gap to the upside” in gas prices is the “main risk that you have to keep in mind.” He argued that this comes as supplies remain “too low” and “momentum on demand is actually quite resilient.”
“All we see is demand remaining above supply and inventories continuing to come down,” he said.
Courvalin suggested that hurricane season could present a risk of a possible supply shock during the summer. He also argued that “a hiccup at a refinery” could have an outsized impact on prices at the pump.
Asked where gas prices will top out in the U.S., Courvalin said current estimates “leave us shy of $6 but still higher from here.”
Courvalin added that the price for Brent crude will likely go $20 higher than current prices. Currently, Brent futures (CO1:COM) sit at about $120, while WTI crude (CL1:COM) hover just below $119.
The Goldman Sachs analyst noted that gas prices won’t begin to moderate until they get high enough to spark “demand destruction.” Given the strong dollar, Courvalin said this was likely to start in Europe rather than the U.S.
For more on the future of gas prices, see why energy analyst Amrita Sen thinks $6 gas is possible.
Source: seekingalpha.com
