Dawn in the crude oil market? Goldman Sachs: Oil prices to hit bottom by the end of 2026; supply gap may emerge in 2027.

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According to the latest macro commodity research report released by Goldman Sachs, the global crude oil market is undergoing a critical period of restructuring.

According to Chasing Wind Trading Desk, the core viewpoint of Goldman Sachs' February research report pointed out: With the fading of risk premiums and the increase in OECD commercial inventories leading to a decline in fair value, Brent and WTI crude oil prices will both bottom out in the fourth quarter of 2026, falling to $60/barrel and $56/barrel, respectively.

Direct impact on investors: For energy investors, this means that the core trading logic for the market in the coming quarters will be "digestion of the supply surplus." The report explicitly states that the global crude oil market will face a massive surplus of up to 2.3 million barrels per day in 2026.

However, the bears’ celebration will not last long. Investors must position themselves in advance for a structural reversal—Goldman Sachs predicts that the crude oil market will fall into a supply shortage again in the second half of 2027. Although the benchmark forecast prices will dip, Goldman Sachs warns that future price risk is two-sided, with overall risk skewed to the upside. While shorting the 2026 cycle, investors should closely hedge the severe rebound risk in 2027 caused by structural shortages.

Fading Risk Premium: Oil Prices to Test “Iron Floor” in Q4 2026

The Goldman Sachs report points out that the downward cycle in the crude oil market will reach its extreme at the end of 2026. It is expected that in the fourth quarter of 2026, Brent crude will hit a bottom of $60/barrel, while WTI crude will bottom out at $56/barrel.

The core logic driving this price revaluation centers on two aspects: first, the fading of risk premiums brought by factors such as geopolitics; second, the substantial decline in crude oil fair value. Goldman Sachs' model shows that the fair value calculation incorporates 1-month/36-month calendar spreads as well as 36-month forward contract valuations.

At present, a large amount of sanctioned oil at sea has increased, which has become an important factor suppressing OECD commercial inventory expectations. With the increase in OECD commercial inventories (measured in forward demand days) and the influence of the interest rate environment, the fair value of the calendar spread has been suppressed; meanwhile, combined with Goldman Sachs’ top-tier project cost curve and spare capacity estimates, the valuation of forward contracts has also been adjusted downward.

Data Perspective on Supply-Demand Fundamentals: From a Surplus of 2.3 Million Barrels/Day to a Deficit in 2027

Goldman Sachs’ quantitative data reveals a steep supply-demand dynamics curve. The global market will experience a period of extreme supply abundance, followed by slow absorption by demand.

2025: The market is already in a state of surplus supply, with a daily surplus of 1.7 million barrels/day.2026 (Surplus Peak): The supply-demand imbalance will worsen sharply, with an average annual surplus reaching 2.3 million barrels/day. Among them, the surplus in the first quarter of 2026 will reach a staggering 2.9 million barrels/day. On the supply side, the total global output in 2026 will climb to 107.8 million barrels/day (a year-on-year increase of 1.8 million barrels/day), with total U.S. output rising to 22.9 million barrels/day and OPEC supply growing to 35.3 million barrels/day. Meanwhile, global demand will be 105.5 million barrels/day, unable to absorb the huge amount of new supply.2027 (Supply-Demand Reversal): This is the turning point in the market structure. The annual average surplus in 2027 will shrink sharply to 600,000 barrels/day. Most crucially, the market will return to a deficit in the second half of the year. Data shows that the surplus in the third quarter of 2027 will be only 300,000 barrels/day, and by the fourth quarter of 2027, there will be a supply gap of -300,000 barrels/day. This gap is due to global demand rising further to 106.6 million barrels/day, while global supply slightly lowers to 107.5 million barrels/day.

Regional Differentiation: Non-OECD Countries Leading the Demand Pattern Shift

On the demand side, report data shows clear regional structural differentiation. Demand in OECD countries will be nearly stagnant in the next three years, staying in the range of 45.9 million to 46.2 million barrels/day.

All the growth in global demand relies entirely on non-OECD countries (rising from 58.4 million barrels/day in 2025 to 60.5 million barrels/day in 2027). India becomes the new engine, showing the most robust expansion, with demand rising from 5.8 million barrels/day in 2025 to 6.0 million barrels/day in 2026, and further reaching 6.3 million barrels/day in 2027.

Although the fundamental data for 2026 looks gloomy, Goldman Sachs clearly emphasizes in the report: While the risk to crude oil prices is two-sided, it is overall skewed to the upside. This means that after the market endures painful inventory accumulation and price bottoming, any unexpected supply disruption or stronger-than-expected demand recovery could, against the backdrop of the expected 2027 gap, trigger a sharp retaliatory rebound in oil prices.

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Risk Warning and DisclaimerThe market carries risk, and investment should be approached cautiously. This article does not constitute individual investment advice, nor does it take into account the special investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views or conclusions herein are suitable for their specific circumstances. Investment is at your own risk. ```