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Goldman Sachs Warn Oil Prices May "Undershoot" $39
Just two short days ago, Goldman Sachs' significant oil downgrade targeting $40/bbl for most of 1H15 shocked the market. This morning, Jeff Currie - the author of the report - appeared on Bloomberg TV to explain his call for a "new oil order" that has been "fundamentally changed by Shale." Most telling though, Currie warns Tom Keene, crude oil may fall below bank’s six-month forecast of $39 a barrel and future rallies could be thwarted by the speed at which any lost shale output can recover... "you can always undershoot to the downside."
Goldman Sachs said U.S. crude oil may fall below bank’s six-month forecast of $39 a barrel and future rallies could be thwarted by the speed at which any lost shale output can recover.
“You can always undershoot to the downside,” Jeff Currie, Goldman’s head of commodities research, said in an interview on Bloomberg Television’s “Surveillance.” The forecast of lower prices was based in part on the bank’s estimates for default rates among the most-indebted U.S. producers, he said.
Goldman Sachs cut oil projections in a report on Jan. 11, estimating that West Texas Intermediate, the U.S. benchmark, will trade at $39 a barrel in six months’ time, as OPEC’s unwillingness to tackle a global surplus leaves prices seeking a new equilibrium. WTI settled at $45.89 a barrel yesterday, its lowest since March 2009.
The speed at which investment can return to shale output is hurting prospects for a price recovery, Currie said today.
“Shale has fundamentally changed this market,” he said. “The lead time between when you put money in the ground and when you get production has collapsed from three-to-four years, all the way down to 30 days.”
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The Goldman report punchline:
Once a 2H15 US supply growth slowdown is more certain and given the very high decline rates on US production, renewed Libyan disruptions and an already visible demand response in the US, we expect the market to rebalance with inventories drawing rapidly from 3Q15 onwards. To accommodate the substantial expected first half inventory build and using the storage arbitrage to the one-year ahead swap, we are revising down our 3-, 6- and 12-month price forecasts for Brent to $42/bbl, $43/bbl and $70/bbl, respectively, from $80/bbl, $85/bbl and $90/bbl, and for WTI to $41/bbl, $39/bbl and $65/bbl from $70/bbl, $75/bbl and $80/bbl. The later expected trough in WTI prices is due to excess US storage capacity.
And visually:
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Simply put - as Currie explains in the clip above - $39/bbl is the level at which the bottomquartile of US shale producers are bankrupt...
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So 39.01 it is.
No. They are buying oil here. They want you to sell it to them. It's a trap.
http://youtu.be/4F4qzPbcFiA
Goldman is not out of their short position yet.
GS leads muppets to the slaughter house. If Goldman is heavily vested in the Shale play, then you can bet your ass they are now long. Even if it means sending our kids to war to bail their bad bets out, sending oil prices higher. Thats how these satanic fucks work.
Bitcoin'd:
https://www.tradingview.com/e/yK2POUQK/
Bitcoin - as good as [paper] gold!
Overshoot to the downside. Not for stawks though. Right?
I called 35 for a period and then a WAR.
The war was a guess. if GS is long shale they are expecting $200 / bbl oil shortly and the war is certain! (which happens when supply is disrupted..)
I don't like being possibly this accurate..
goldman are fucing crooks dealing against their clients stupid enough to entrust them with their money. time to go long.
The idea that shale output can be ramped up in 30 days after half the wells stop pumping is utter bullshit. Plus the high yield market, once burned, will be very reluctant to invest in the "swing producer" subject to the ups and downs of oil prices and the consequent long periods of no cash flow and no loan payments. No mention in this report of the effects of the fracked well decline curve and what happens is there is no new drilling for a year or more as many keep producing.
Unalloyed manipulative propaganda.
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Yeah, I remember Goldman telling us we were going back to $150 again too.
Just waiting for Friday when Goldman says the glut is over, $75 oil is coming, and oil stocks are a BUY!
Hooray
And the bottom is in. Thanks Goldman, as its evident with the last 40 minutes before pit close on CL. Muppets fucking slaughtered as usual.
If you need a good laugh take a look at whats happening to bitcoin.
"Funny money" that isn't....comedic.
There is real money here folks...this is not a joke nor is trying to finance say...the State of Loiusiana.
I say again...sell your transport stocks. Ten million is the deductible.
what?
Come on? (2) major banks are already calling for sub-contango $38. Brent is going to invert, and WTI is going to $35.
Oh, I TRUST big banks - they ALWAYS look out for the little guy. They will ALWAYS let the little guy get these positions first - BEFORE their own trading desks and any BIG clients they have... sure...
The best thing to do when a big bank says 'sell' is to wait one or two days - them buy - and vice versa. If you do what they recommend you will usually find them on the OTHER side of your trade.
squid bloviations always amuse me
Is this anything like their $200 call when it was $150?
Buy some OIL or USO now. If oil hits $40 buy UCO or the tripple long one and make a boatload!
Check.
USO at $18
Grow some nuts and buy UCO options
It's not the bottom yet.
There comes a point when the cost quotient, outweighs the risk.
yup, the bottom is in.
Pretty obvious Goldman drove down oil and oil stocks this morning with the help of this 'call'. Just as obvious they cashed in and reversed to bullish at the close.
Aaaaaaaand it's gone.
Cramer also pounded oil and oil stocks the last few days. If you sold oil then you have been CRAMERED - Again!
$10 will be the bottom.
Downgrade at the bottom number 2. Classic GS suckage. Good thing these asswipes are eligable for bailouts.
Which means it is about to climb to $60. Assholes.
What Goldman wants, Goldman gets.
Whatever happened to that wanker who kept going on about the fact he lived in Chiswick?
If Goldman actually followed the advice of their own "best and brightest", said firm would be bankrupt 20x over.
Some people talk their book. Vampire Squid does the exact opposite.
Time to back up the crude truck.
Maybe oil should just cost what oil should cost, without "speculators" and leechfucks.
GS is hoping to drive that 25% into bankruptcy IMHO so it can then Mahe distressed debt and equity investments before taking oil parabolic on "supply shortages". Nearly infinite abuse of position and power, of asymmetric leverage and knowledge of positions.
Goldman is not a benevolent dictator doing God's work when the Prince of Darkness sits at the helm counting his options and profit on your dime, SUCKERS. If you are taking hints about the market from GS seriously, it is time to re-arrange your priorities in life before you get burned. Goldman Sachs built their careers on fraud, advertising, and pyramid schemes, as well as, shell games.
I love when people talk about lower oil prices like its BAD news. WTF? Lower oil prices is great news. Period. End of story. The vast majority of the world benefits from lower oil prices. Enjoy it. Pray it continues.
Definitely the bottom is in now. Just look at the huge volume in oil on the way up after its fall. GS covered and went long.
https://www.youtube.com/watch?v=e8__64mFVes
Ththe history shows, that Goldman's statements have to be inverted, if one wants them to be true.
Everyday a new guess on oil by the tribe. These Zionists are desperate. If I want to hear what one of these fucks thinks, I'll head down to the corner synagogue. Not reading another zioconazi piece from the squids on ZH.