Oil prices could see $20/bbl – Goldman Sachs

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 28, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Delhi) – Research Team at Goldman Sachs, suggests that their forecast is for oil prices to bottom out in mid-2016, but their commodity strategists have warned of the risk that the current surplus could breach storage capacity, leading to a collapse in prices to cash production costs, around $20 per barrel.

    Key Quotes

    “Were this to occur, it would obviously extend the dynamic seen from mid-2014, weighing further on investment in commodity-related sectors (and boosting consumption at least on the margin) but keeping headline inflation low and perhaps prompting modest additional easing in a few regional economies. We would expect to see yield curves bull steepening and Asia FX weakening against the dollar but generally outperforming other (commodity producing) EM regions. It’s worth noting that once this scenario played out, risks to headline inflation would become quite asymmetric to the upside.”
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