FAST FIVE: Goldman Sees Oil Rising To $65 In 2021 But Turbulence In The Near-Term
Goldman Sees Oil Rising To $65 In 2021 But Turbulence In The Near-Term Tyler Durden Mon, 11/30/2020 – 10:43 As the global economy makes its way through the covid pandemics, the question asked by all economists is when do we return to normal; one asset class that is especially interested in the answer is oil, having suffered tremendous losses in a year when virtually every other asset generated tremendous returns on the back of a liquidity firehose from central banks, even though oil prices did reach their highest post-COVID levels last week, with Brent spot near $48/bbl, supported by encouraging vaccine results as well as rising tensions in the Middle East.
We expect this winter wave to generate a 3 mb/d hit to global oil demand, only partially offset by heating, EM and restocking demand, although this demand hit has so far been masked by strong Asian crude buying and restocking.” As such, Goldman expects these “muddied short-term fundamental signals” and the opposite pulls of lockdowns vs.
vaccines to keep oil prices volatile in coming weeks.
Jun-22 Brent timespread trade recommendation, first recommended on May 1, for a total potential profit of $4.82/bbl (as of market open on Sunday, November 29).
In conclusion, the Goldman strategist who correctly called April's WTI plunge into negative over a month before it happened, believes “that these winter headwinds are just speed bumps on the path to a tightening oil market, with the winter COVID wave delaying but not derailing the oil market rebalancing, with normalized OECD stocks, OPEC+ spare capacity returning to 1Q20 levels and finally needed shale production growth all occurring by 4Q21.” The bank's recommendation: “go long Dec-21 Brent forwards, our preferred expression of oil's 2021 rally, as well as for producers to wait to hedge.”.