Goldman Sachs Commodities Research raised its forecast for Brent oil benchmark in the second and third quarters by $5/bbl after OPEC and allies surprised the market with extension of existing output cuts.

The bank forecasts Brent price will rise to $75/bbl in the second quarter and to $80/bbl in the third quarter of 2021.

US shale producers were quick to boost output in response to rising prices in recent years, increasing their market share, while Saudi Arabia and other major producers were forced to cede ground. However, US oil output failed to stage quick recovery after historical demand contraction in 2020 due to global lockdowns. This fact helped OPEC to drive prices to the desired level with much better success than in previous years.

OPEC and its partners agreed to keep output quotas largely intact, citing concerns about fragility of recovery in demand. Only Russia and Kazakhstan were granted ability to slightly increase output.

"We believe it is now clear that OPEC + is indeed pursuing a tight market strategy and our updated supply and demand outlook indicates that OECD stocks will be at their lowest since 2014 by the end of this year", said Goldman in its report.

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