Oil best China reopening play: Goldman Sachs

One expert tips the black liquid to soar over 30% to trade for US$110 a barrel this year.

| More on:
A graphic depicting a businessman in a business suit standing with his hand to his chin looking at a large red arrow pointing upwards above a line up of oil barrels againist the backdrop of a world map.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • ASX 200 energy shares might be in for a big year if Goldman Sachs' Jeff Currie's forecast for the oil price is to be believed
  • The expert tips the black liquid's value to rise to US$110 a barrel in 2023, dubbing it "the true [China] reopening play"
  • The price of oil generally correlates directly to producers' bottom lines

S&P/ASX 200 Index (ASX: XJO) oil shares could be worth watching amid China's reopening, according to Goldman Sachs global head of commodities research Jeff Currie.

The expert tipped the black liquid to climb to trade at US$110 a barrel by the third quarter of 2023 if international travel takes off in the nation, as per Bloomberg TV.

Of course, that would likely be good news for ASX 200 oil shares such as Woodside Energy Ltd (ASX: WDS), Beach Energy Ltd (ASX: BPT), and Santos Ltd (ASX: STO).

Their bottom lines typically hinge on the energy commodity's value, with surges in the oil price pushing earnings sky-high in 2022.

Let's take a closer look at why Currie dubbed oil "the true reopening play".

Tailwinds for oil price as China reopens

The oil price could rebound to near-2022 highs this year as China relaxes COVID-19 restrictions and reopens its borders, as announced late last year.

In fact, Currie expects oil's value to leap more than 30% from around US$82.67 as of Wednesday's close.

The expert believes oil could reach U$90 a barrel this quarter. It could then increase to US$95 in the June quarter as "the reopening gains momentum".

Throw a premium due to the reopening's speed and international air travel returning to China on top, and "you're up to U$110 by [the] third quarter", Currie said.

And he's not alone in his bullishness. Indeed, it's surpassed by that of hedge fund trader Pierre Andurand, my Fool colleague James reported earlier this week.

Andurand is said to believe the price of oil could surpass US$140 a barrel this year. Similarly to Currie, Andurand's forecast relies on Asia's reopening and is conditional on no new lockdowns.

That could lead demand to increase by 4 million barrels this year, according to the trader.

No doubt, all eyes will be on ASX 200 oil shares if such forecasts come to fruition.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

Smiling attractive caucasian supervisor in grey suit and with white helmet on head holding tablet while standing in power plant.
Energy Shares

Why is the Woodside share price outperforming today?

Woodside shares are marching higher today. Let’s find out why.

Read more »

A corporate executive in a suit and wearing boxing gloves slumps in the corner of the ring representing the battered Zip share price and consideration reportedly being given to dumping the company's UK operations
Energy Shares

Down 55% in 6 months, why I think Paladin Energy shares are now a bargain buy

I think ASX 200 investors have overreacted in selling down this ASX 200 uranium stock.

Read more »

A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall
Energy Shares

Is Woodside stock a buy for its 8% dividend yield?

Woodside's dividends look fat, but proceed with caution...

Read more »

A man sits wide-eyed at a desk with a laptop open and holds one hand to his forehead with an extremely worried look on his face as he reads news of the Bitcoin price falling today on his mobile phone
Share Fallers

ASX 200 uranium stock alert: Paladin Energy shares just crashed 29%!

Paladin Energy shares are under intense selling pressure on Tuesday.

Read more »

A happy woman wearing a sweatband at the gym celebrates success or an achievement by puffing up and flexing her muscles with pride.
Energy Shares

1 ASX dividend stock down 43% I'd buy right now

Here’s a dividend stock worth getting energised about.

Read more »

A happy woman flies with arms outstretched on her boyfriend's back on the beach at dusk.
Energy Shares

2 ASX utility stocks that are smart buys for Aussies in November

These two could be standouts, according to top brokers.

Read more »

Miner looking at a tablet.
Energy Shares

Down 12% in a month! Is the Woodside share price finally back in bargain territory?

This stock has lost some investor energy. What now?

Read more »

sad looking petroleum worker standing next to oil drill
Energy Shares

Santos shares hit new lows in October. What next?

There's an interesting risk/reward calculus at play.

Read more »