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

A male oil and gas mechanic wearing a white hardhat walks along a steel platform above a series of gas pipes in a gas plant
Dividend Investing

Should I buy Santos shares for dividend income?

Santos shares have been steadily upping their dividends since 2020.

Read more »

Focused man entrepreneur with glasses working, looking at laptop screen thinking about something intently while sitting in the office.
Energy Shares

Are Santos shares a screaming buy?

Goldman Sachs thinks now could be a good time to buy this energy stock.

Read more »

A young woman lifts her red glasses with one hand as she takes a closer look at news about interest rates rising and one expert's surprising recommendation as to which ASX shares to buy
Energy Shares

What is getting investors excited about this ASX 200 uranium stock today?

There's a good reason why this share is charging higher on Wednesday.

Read more »

Businessman studying a high technology holographic stock market chart.
Energy Shares

Is this stock the 'best placed' of the ASX uranium shares?

This fund manager thinks so.

Read more »

Worker on a laptop at an oil and gas pipeline.
Energy Shares

Why today is a big day for Santos shares

Why is everyone talking about Santos shares today?

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Energy Shares

This ASX 200 mining stock just reported a 40% earnings jump

Investors appear pleased with this miner's performance during the first quarter.

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Energy Shares

Are beaten down Paladin Energy shares a bargain buy?

Bell Potter thinks this beaten down uranium stock could be worth picking up.

Read more »

Worker inspecting oil and gas pipeline.
Energy Shares

3 headwinds facing ASX 200 energy stocks in 2025

After a tough 12 months, what’s ahead for ASX 200 energy stocks in 2025?

Read more »