Goldman Sachs: Oil Market Capitulation Imminent

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.