Latest update from Goldman Sachs is forecasting oil at $130 by the end of the year


Goldman Sachs’ view on much higher prices is based on:

  • demand exceeding what is currently expected
  • supply remaining low, stocks falling
  • and markets not positioned for higher prices

GS:

  • In our view, the only rational explanation is destocking, as commodity consumers deplete their stocks at higher prices, thinking they can restock once a broad easing creates excess supply. Yet, if this turns out to be incorrect and excess supply does not materialize as expected, the rush for resupply would exacerbate the shortage, pushing prices higher this fall, potentially forcing central banks to generate a more prolonged contraction. to balance commodity markets.
  • Instead, markets appear to be pricing in a soft landing: further minimal inflation-dissipating interest rate increases and sufficient economic growth to keep earnings buoyant through 2023.
  • In our view, macro markets are pricing in an unsustainable contradiction – it is difficult to reconcile a lower FCI, a more dovish Fed pivot, lower inflation expectations and lower commodity inventories.


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