Crude oil is back above $75, and could see $87, says Goldman Sachs.
All thanks to disruption in the Gulf of Mexico, and signs of unexpectedly strong demand.
“While we have long held a bullish oil view, the current global oil supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above consensus forecast and with global supply remaining short of our below consensus forecast,” wrote Goldman Sachs’ Damien Courvalin, as quoted by Fox Business.
Should oil prices continue to head higher, investors should keep an eye on oil stocks like Conoco Phillips (COP).
“The company should deliver 30%-40% of cash flow back to shareholders in the form of dividends/buybacks, has proven a core competency around M&A execution, offers a better geographic diversification than many E&Ps [exploration and production companies], but higher oil leverage than the U.S. majors. In addition, the stock trades at the highest free cash flow yield among the majors in 2022 and lowest EV/DACF multiple,” says Goldman Sachs analyst Neil Mehta, as quoted by Yahoo Finance.
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