Last week, WTI crude oil priced fell to new multi-year lows in the aftermath of the OPEC meeting in which the organization decided to maintain its strategy of flooding global markets with crude oil. In the wake of OPEC’s decision, Goldman Sachs analyst Damien Courvalin now believes that the global oversupply of oil will not begin to subside until Q4 of 2016.
Oil Short Reloaded
According to Courvalin, the most recent plunge in oil prices was partially driven by the market’s relatively bullish positioning on oil prior to the OPEC meeting. Hopes of a change in tone from the organization, however, were quickly dashed, and the flood of short selling in the market pushed crude prices to new lows.
“Although prices are now below our 3-mo $38/bbl WTI forecast, we still see high risks that prices may decline further, as storage continues to fill,” Courvalin explains.
Low Prices Are Ultimate Solution
In terms of the long-term outlook for oil prices, today’s low prices will ultimately bring…
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