Goldman’s commodity guru says it may be ‘pretty easy’ for oil to reach $90 a barrel this summer

Published Tue, Jul 6 20212:57 PM EDT

Kevin Stankiewicz @in/kevin-stankiewicz-b5593466 @kevin_stank

The price of oil can easily move higher in the near term without a deal between between OPEC and its oil-producing allies, Goldman Sachs ' commodities chief Jeffrey Currie told CNBC on Tuesday. Talks between the energy alliance have been postponed indefinitely after a plan for production for August and beyond was unable to be reached over a series of meetings in recent days. The lack of an agreement, as it relates to the price of oil, is "bullish any way you slice it," Currie said in an interview Currie on "The Exchange." "Our base case is $80 a barrel in third quarter and the longer this takes [with OPEC], the more risk you get to the upside," said Currie, who serves as the investment bank's global head of commodities research. "We could see prices spiking into the $85-$90 a barrel range during these summer months pretty easy." International benchmark Brent crude was down more than 3% Tuesday to around $74.56 per barrel, while West Texas Intermediate crude futures , the U.S. benchmark, traded lower by roughly 2.3% to $73.40. Both Brent and WTI had been higher earlier Tuesday, with the latter reaching its highest price since November 2014 when it hit $76.98. If Brent were to reach the upper end of Currie's range, that would represent around 20% upside from where it traded intraday Tuesday. Currie noted that absence of a deal between OPEC and its OPEC+ allies on production increases arrives at a seasonally strong time for oil demand as people hit the road or skies for trips. That can have the effect of pushing up prices. "The tightest market is between now and Labor Day, so you have the big surge in vacation and travel demand against really no supply," Currie said. "We estimate in the month of June, this market was in a 2.3 million barrel per day deficit," he added. Currie also addressed the impact rising oil prices for energy companies and their approach to capital spending to drill more. He said right now, it's too early to tell whether expanding presence of the environmental, social and corporate governance, or ESG, movement is causing firms to be more cautious. "I like to say, 'Show me a really good commodity company with great returns that's not getting capital.' They're coming out of a really bad time period right now. Part of the reason there's no capital going into the sector is that the returns have been miserable," Currie said. "Just recently we've seen this pop in oil price. Investors don't want to see a one or two month pop in oil prices. They want to see years of good returns." "A lot of these investors are going, 'Hey, we want our money back before you start to really drill,' and as a result, the focuses of these C-suites is going to be on return on equity, not growth in large capex budgets," he said.

A worker prepares to lift drills by pulley in the Permian basin outside of Midland, Texas.

Brittany Sowacke | Bloomberg | Getty Images

The price of oil can easily move higher in the near term without a deal between between OPEC and its oil-producing allies, Goldman Sachs' commodities chief Jeffrey Currie told CNBC on Tuesday.