“We don’t think you’re going to get back to those $80 levels again, so you’ve got some modest upside here,” Goldman Sachs’ head of commodities research, Jeff Currie, told CNBC this week.
“While the macro risk-on environment and the threat of disruptions may drive spot prices even higher, we still expect that prices will decline gradually from this summer as shale and OPEC production increases,” they concluded. “With large spare capacity in OPEC and the Permian basin and a wave of long-cycle projects still expected to come online in 2020, we maintain our $60/bbl forecast for next year.”
Goldman summed up its argument by saying that what lies ahead for the oil market is basically a rerun of the 1990s, which the bank characterized as “tight spot markets but well supplied forward balances and reflected in steady backwardation with an anchored back-end.” Goldman sees backwardation in the futures curve as a thing that will stick around.
In short, there is upward pressure on prices now, but it may only temporary.
About one month ago, I talked about oil and why I saw it going to $63.
Oil At 4 Month Highs…What’s Next???
Right now the offense (the buyers) has the ball with the opportunity to advance the ball to the the $63 level.
Price hit the daily supply at $63, consolidated at $64 and dropping now.
Now on the monthly chart, Goldman’s upper limit actually coincidence with a Supply Zone.
But price will have to content with the Sellers $4 to $6 higher.
Will Goldman Sachs be right, stay tuned?
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
Get involved!
Comments