Goldman Sachs Group Inc. isn’t lowering its expectations for better crude prices in the near future. The bank forecasts a bullish price in the near future over the tightening supplies. Another notable bank, Barclays, published its own note last Monday covering the status of their crude through 2022 to be bullish.
Goldman continues to recommend to its investors to keep putting their trust on owning commodities amidst the continued slump they are in. Commodities have been stumbling for the last 8 months, according to a recent commodity index, the performance of raw materials was dwindling down by 3% last week, making it the biggest decline ever since last July.
China’s Rising Demands Boosts Commodities Future
The bank’s analyst Jeffrey Currie stated that the ever growing demand for commodities in China for its infrastructural development, particularly oil and nickel, are already rising as of today. Currie stated that “What gives us confidence in tighter forward commodity markets despite this past week's sell was that it was mostly time-spread neutral across the commodity complex," and “In fact, front end WTI time spreads strengthened into Thursday and Friday's flat price weakness. If the sell-off was driven by fundamental weakness, time spreads would have weakened."
Even China’s credit and liquidity data for February are below the analysts’ expectations. Despite the slow growth, the figures are still a lot higher of what’s last year, signaling a further increase in the demand levels of the commodity in the world’s largest user of energy.
Goldman has preserved its second-quarter price outlook for the US benchmark West Texas Intermediate crude, it is then priced at a $57.50 a barrel and copper on the London Metal Exchange at $6,200 a ton. WTI crude was down last Monday by an estimated 9 cents at $48.40 a barrel on the New York Mercantile Exchange, while LME copper has seen an incremental increase of 1.2 cents at $5.80 per ton.
US Crude Supply Surges
US oil lowers a few cents entering this week’s Market, this continuous slump has been implanting fear that OPEC may eventually drop its oil-production cut beyond the six-month mark. According to the director of market research at Tradition Energy, Gene McGillian "There is growing skepticism that the production cut has been enacted long enough to take care of the overhang, and "The longs who piled in last year are turning on the market because there seems to be a realization that a six-month agreement isn't long enough to rebalance the market."
Russia’s Rosneft, its top oil major, warned that the resurging of US oil output can potentially sum up discouragement on the ongoing
BNP Paribas global head of commodity strategy Harry Tchilinguirian recently said in an interview that "It will be interesting to see how OPEC rhetoric will evolve with this price correction. Is price the only consideration when it comes to the decision of extending cuts?" He also added that the cut in inventory levels from OPEC was much more difficult rather than targeting a specific price.
Along with the WTI decreased last Friday, Brent crude future also saw a diminishing price per barrel by 2 cents at $51.35, the lowest dip on the session was at $50.83 making it the lowest since November 30 of last year.
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