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Oil Stumbles Below $49 As Goldman Warns "Lower For Even Longer"
Despite its dubious track record, oil prices are stumbling after Goldman Sachs releases a report calling for oil prices to remain lower for even longer, calling for a drop to $50 within the next 6 months.
Via Goldman Sachs,
Crude Oil: Lower for even longer
Fundamentals: Ex SPR US crude stocks built 3.6mb in Sep vs. a seasonal draw of 2 mb. Cushing on the other hand drew 3.9 mb vs. a seasonal draw of 2 mb though we are heading into peak refinery maintenance period. Fundamentals remain weak and we view the market to be strongly oversupplied. Sep crude, gasoline, distillate, jet, fuel oil and unfinished oil inventories have built 8.9 mb vs. a seasonal build of 1.5mb. The market now requires non-OPEC production to shift from growth to large declines in 2016. The uncertainty on how and where that adjustment will take place has increased significantly.
The potential access to capital in the US means that elevated financial stress needs to be maintained to eventually attain these adjustments. There is also the potential for prices to collapse to production costs if the oversupply breaches logistical and storage capacity. We estimate 2015 oil demand growth at 1.62 mb/d and we forecast 2016 global demand growth to be 1.28 mb/d which leaves the market 400 kb/d oversupplied.
Price Outlook: Prices have declined sharply over the past month to our previous $45/bbl forecast. Part of this was precipitated by macroeconomic concerns but in our view, it was also warranted by weak fundamentals. In line with our oversupplied outlook, we have changed our 3, 6 and 12-month WTI forecasts to $42/bbl, $40/bbl and $45/bbl.
Time spread Outlook: Time spreads should remain in contango as the market needs to incentivize storage since there is insufficient demand to absorb supply.
Charts: Bloomberg
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Gold Stumbles Below $49 As Oilman Warns "Lower For Even Longer"
S/
that is because they made a deal with Iran
Iran oil is coming online
*) 1st 6 months 1/2 million barrel per day.
*) After 6 months 1 million barrel a day
The price will be cut by $10 or $20 more.
Who care what Goldman says. Is the Great Gartman long or short of oil?
With all those not in the workforce and not counted as being unemployed less demand.
the BLS can exclude people as being unemployed all it wants but eventually it matters in the numbers elsewhere.
Dup
WTF? Triplicate
Even the Postman Always Rings Twice Only
Low oil prices is Obama's war against Russia. Goldman is official arm of the Deep Sate that rules America. Their job is to keep oil and gold low. So what else will Goldman say?
Think about how the Obama administration sees the state of the world. It wants Tehran to come to heel over its nuclear programme. It wants Vladimir Putin to back off in eastern Ukraine. But after recent experiences in Iraq and Afghanistan, the White House has no desire to put American boots on the ground. Instead, with the help of its Saudi ally, Washington is trying to drive down the oil price by flooding an already weak market with crude. As the Russians and the Iranians are heavily dependent on oil exports, the assumption is that they will become easier to deal with.
John Kerry, the US secretary of state, allegedly struck a deal with King Abdullah in September under which the Saudis would sell crude at below the prevailing market price. That would help explain why the price has been falling at a time when, given the turmoil in Iraq and Syria caused by Islamic State, it would normally have been rising.
The Saudis did something similar in the mid-1980s
http://www.theguardian.com/business/economics-blog/2014/nov/09/us-iran-r...
Why would Saud co-operate with a US led strategy that leaves them weaker and has the potential for a coup?
The high price, probably caused by QE, caused malinvestment and over production; bullshit Chinese growth figures also distorted the trend for global demand. These interventions have come unstuck.
On Saturday, Cushing suffered a 4.5 magnitude earthquake followed by a few smaller aftershocks. Its only a matter of time now.