Goldman Turns Bearish On Oil Again

Posted by Tyler Durden

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Goldman’s energy analyst Damien Courvalin, who on May 1 turned bullish on oil (after being one of the first in mid-March to correctly warn that negative oil prices are coming) expecting a jump in prices from record lows due to a sharp reversal in supply/demand dynamics in the oil market, has agreed with us, and in a note discussing the latest fundamental drivers in the oil market, says it has turned “short-term bearish” on oil, for the following four reasons:

i) the unprecedented collapse in oil margins to unprecedented lows (which is reflective of both over-valued crude prices as well as a more moderate demand recovery);

ii) demand expectations are running ahead of a more gradual and still highly uncertain recovery;

iii) shale and Libyan shut-in production are coming back online, and

iv) prices are at levels where OPEC supply cuts should ease and Chinese purchases slow.

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