Goldman Begs Clients To BTF Oil Dip

Tyler Durden's picture

"Ignore the drop in oil prices... it's just technical" is the message from Goldman's bullish Damien Courvalin who believes fundamentally the pace of the inventory declines are encouraging and does not see evidence in the oil market to justify this (negative) shift in sentiment. In other words, BTF Oil Dip!

Another technical oil sell-off

Oil prices fell sharply yesterday, down 3.6% with Brent prices now at $53/bbl. We view technicals rather than fundamentals as the driver of this move lower with the US weekly inventory data released yesterday in line with expectations and the sell-off accelerating as prices traded through their 50 and 100 day moving average.

US commercial inventories declined by 1.7 million barrels last week, in line with the API release the day before but short of the Reuters and Bloomberg surveys. On the crude side, the disappointment came from resilient imports and a large swing in the balancing item. And while implied demand appeared to dip week on week, we find that gasoline demand is likely once again understated, with the more accurate ethanol implied demand metric pointing instead to resilient gasoline demand growth, while distillate demand remains strong.

We find in fact that the US inventory data since March has been surprisingly good: crude inventories have been tighter than seasonal through March and April, with main petroleum products drawing faster than seasonal since February. This is consistent with the greater than seasonal inventory declines observed on aggregate in ARA European ports, Singapore and Japan.

Ultimately, the sell-off occurred an hour after the release of this US data and accelerated as prices traded through their 50 and 100 day moving averages, a repeat of the March 7 and October 29 sharp decline in prices. Yesterday’s decline also featured a increase in open interest, suggesting that like in these previous instances, new shorts were the drivers of the move lower.

Finally, although timespreads weakened slightly yesterday, the move was mainly a parallel shift of the forward curves, which is also reminiscent of the March sell-off and may reflect hedging pressures as well instead of a reassessment of forward fundamentals.

 

As a result, and despite yesterday's move, we continue to view the pace of the inventory declines as encouraging for the rebalancing of the oil market. We further continue to expect an acceleration in stock draws through 2Q17 on the combination of high compliance to the OPEC cuts and robust demand growth, as observed so far this year.

Finally, while concerns over a slowdown in global growth and an unwind of the reflation trade may have contributed to the roll over in oil prices over the past week, we currently do not see evidence in the oil market to justify this shift in sentiment. This leaves us reiterating our sequentially constructive 2Q17 Brent price forecast of $59/bbl.

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Manipulism's picture

Desperation, harhar.

Deathrips's picture

The fed wants oil higher...it will go higher.

 

RIPS

Doña K's picture

Gravity is the elusive one from the 4 forces in the Unified quantum theory.

You can stop gamma radiation with lead and alpha with paper, but nothing stops gravity.

Otherwise defined as "the earth sucks."

Oil is going down to $20 with undulations in between.

Arnold's picture

I've put 1/2 plywood down over Beta source with good results.
Course the Rad Tech was a drinker.

I'd call you full of stuff, if I still didn't stand on $10/bbl as as low as it will go.
Won't happen, but it is my call anyway.

Kefeer's picture

They will dump more oil into the oceans before they allow it to go that low.  Your assumption is that fundamentals are exist in a world of corruption.  Technicals are just as dead in rigged markets and a world full of despots.

Arnold's picture

$50 is where they want it to be for the Saudi Aramco IPO.
There is a mega shit ton of cash and prizes based on this.

If you let it fall to a 'discovery' price it will not recover soon in this lame ass recovery summer number longest eva.

Soo... my retirement pension is not based on this, but I have a Black Swan in range of Ma Deuce, cocked and locked..

Arnold's picture

On Tuesday, a HKEX spokesperson said the exchange was an attractive venue for international companies because it can serve as a gateway to Greater China's "vast liquidity pool".

http://www.reuters.com/article/us-aramco-ipo-china-exclusive-idUSKBN17L1F3

post turtle saver's picture

BINGO +1

edit: talk about "pump and dump" lol

Arnold's picture

The Chinks could float their Blue Water Navy on the amount of salt water they are pulling out of the Ghawar.

Not much exaggeration.

Doña K's picture

<<<<< $50 is where they want it to be for the Saudi Aramco IPO.
There is a mega shit ton of cash and prizes based on this.>>>>>

Good luck to whoever buys Aramco IPO. But wall street will push the IPO and then short it later. Classic M.O.

Maybe California unions will buy, then I will not feel so bad. Karma is a bitch.

Arnold's picture

The pension funds will never get their corrupt hands on it Dona.
It is bigger than any pension fund can handle.

It is a world wide push.

Players only.
Pension funds are not players, obviously.

Pensions will be ecstatic with return of investment. never mind
Return on investment.

You'll take 0% T bills and be thank full.

Arnold's picture

Very oldie.

https://en.wikipedia.org/wiki/Ghawar_Field

Things are better in Yemen now.
The only problem that remains are those pesky Yemenis.

Kefeer's picture

The war (Yemen) for oil no one is talking about.  Syria is about a damn pipeline.  

Hell is gulping down many a souls and more as we move forward.

Arnold's picture

No worries.
Shiva is coming.

wisehiney's picture

There's your sign.

Seasmoke's picture

Ok. Have Blankfein call me on a conference call with Corzine and Paulson and let's do this.

Anarchyteez's picture

So this means we short it right?

e_goldstein's picture

Why not?

Goldman is going to.

bobdobolina's picture

This just screams of Goldman trying to protect their prop position....

cstu7011's picture

National ride your bike weekend!!! 

Kefeer's picture

National Organ Donor Weekend!!  Bike hard and donate organs; it is the right thing to do.  

Did you that you can only donate organs if you are alive; a dead person has dead organs.

suckerfishzilla's picture

I would second guess every word coming out of GS in light of the fact that they like to advise their clients to go long while they themselves short the same instrument. 

Arnold's picture

Huh.
Why would Gartman Sachs do that to their muppets?

CHX13's picture

Sell oil now, it will go lower befor it moves higher longer term (upon turmoil and/or war).

jmack's picture

They must have some long positions they need to put off on someone else.

pebblewriter's picture

It might be technical, but it's still a dip.  And, it has more to go.

 

Kefeer's picture

Here is your weekly BS on the reason you are paying too much for gasoline and to justify the 10% increase at your local pump in the past 2 days.

BS#1 - We find in fact that the US inventory data since March has been surprisingly good: crude inventories have been tighter than seasonal through March and April, with main petroleum products drawing faster than seasonal since February. 

BS#2 - This is consistent with the greater than seasonal inventory declines observed on aggregate in ARA European ports, Singapore and Japan  

This is all made up in a world of lies and damn lies.

Zero_Hope's picture

Go ahead, Suckers.

Do you think Goldman loves you?

ThankUGartman's picture

F what Goldman says...where the flying fuck is Gartman on vacation? I've got 3 g's waiting to go long his next pick depending on if he's short, indecisive or questionablly obtuse the franc and pound in yen terms, Sdr terms, yuan terms etc. In Gartman I trust all others suck a weeny. $$$