Goldman Sachs: Oil Market Capitulation Imminent

- January 15th, 2016

Speaking with CNBC on Friday, Jeff Currie, global head of commodities research at Goldman Sachs Inc. (NYSE:GS), discussed current issues in the resource space, focusing in particular on the oil market.

Speaking with CNBC on Friday, Jeff Currie, global head of commodities research at Goldman Sachs Inc. (NYSE:GS), discussed current issues in the resource space, focusing in particular on the oil market.
He emphasized that lately there’s been “a lot of financial volatility in [oil] markets, but we haven’t seen the subsequent volatility in fundamentals … and that’s what we’re going to be watching for.” Already there have been some indications that this volatility in fundamentals is arriving — “we’re starting to see the makings of a capitulation,” he said.
That said, when asked if he’s calling a bull market for commodities, Currie said that’s not yet in the cards:

The question is, “what are the signals to go out and buy commodities?” And what we’re looking for is a substantial reduction in supply. And we’re starting to see the makings of that happening. You’re seeing production in the US is down 150,000 barrels per day year-over-year, but it’s not sufficient to go out and call a bull market right now.
They key point of the note we put out is that the material price declines are behind us. So if we move from $30 to $20, yes, that’s a 33-percent decline in prices, and from a trading perspective, that’s significant. But from an economic perspective, it’s not.

Aside from oil, Currie commented briefly on base metals, noting that “when you look at base metals [the] correction is going to be a lot more difficult than what it is for energy.
Watch the video below for more insight from Currie:

Click here to view the interview on CNBC.

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