Goldman Sachs is still bullish on oil and anticipates strong demand that would require OPEC+ putting another 2 million barrels per day (bpd) on the market in the third quarter, after the around 2 million bpd that the alliance and Saudi Arabia decided to return between May and July. “We forecast a larger rebound in oil demand this summer than OPEC and the IEA, requiring an additional 2 mb/d increase in OPEC+ production from July to October,” Goldman Sachs said, as quoted by CN Wire. The investment bank expects excess oil inventories to normalize by the fall of 2021.

Last week’s OPEC+ agreement to ease the cuts “comes a month sooner than we had expected,” Goldman Sachs says, noting that the increases for June and July are smaller than its analysts had anticipated. OPEC+ decided on Thursday to gradually increase collective oil production by over 1 million bpd over the next three months. The group will raise its production by 350,000 bpd in each of May and June and by more than 400,000 bpd in July. Additionally, Saudi Arabia will also gradually ease its extra unilateral cut of 1 million bpd over the course of the next few months, beginning with monthly production increases of 250,000 bpd in each of May and June.

Goldman Sachs continues to hold a bullish view on oil demand, despite the recent concerns about demand in Europe and India, which sent oil prices down by 2 percent early on Monday. At the beginning of March, Goldman Sachs said it expected Brent Crude prices to hit $80 a barrel in the third quarter this year, up by $5 compared to the previous forecast issued two weeks earlier. Even after the sell-off in oil in mid-March, Goldman said that the “big breather” was a buying opportunity for oil and continued to forecast Brent hitting $80 per barrel in the summer.