Oil Plunges As Goldman Slashes Year-End Price Forecast

The oil prices have plummeted this morning. WTI is now back at $67, wiping out all the gains made by the rumor rally that preceded Saudi Arabia's production cut.

Saudi Arabia, which is still fighting short sellers for low prices, will reduce output by 1 million barrels per day in July.

"Saudia's Energy minister... reiterated his views a

There is a discrepancy between the futures and physical markets

Saxo Bank stated that this gap will continue until the macroeconomic outlook stabilizes.

Goldman Sachs slashed their year-end oil forecast from $95, to $86 per barrel Brent. They cited a higher supply of oil from sanctioned exporters, which they said would offset the recent OPEC+ cuts and Saudi reductions amid a potentially low demand.

Analysts at Goldman Sachs have been bullish about oil prices in recent months. They expect tight markets to continue in the second half. The Wall Street bank predicted a rally for oil and commodities less than two weeks back, following the largest-ever destocking of commodities currently underway. Goldman analysts admitted that their predictions of commodity prices were wrong even then.

Bulls like us find comfort in knowing that the end-use market for commodities has not yet shown signs of recession and that investment in supply is still elusive.

Goldman's analysts stated in a note published at the end May.

Bloomberg

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"But this is missing the point that we were incorrect in our price expectations."

OilPrice.com has reported that.

Goldman Sachs sees a new outlook for the oil market despite the Saudi unilateral cut and the extended reductions in production at the broader OPEC+.

There is little chance that oil prices will spike in the second half of this year.

Brent Crude is expected to be $86 per barrel by December and WTI Crude will be $81, down from the $89 barrels forecasted in previous years.

According to the bank, prices will be affected by a resilient Russian oil supply as well as a higher than expected supply from Iran and Venezuela.

Goldman analysts, however, expect commodities to come back roaring if recession fears prove to be unfounded.

The absence of a global recession will likely lead to higher prices for oil, commodities and rates. This would cause the stock market to react negatively.

They said.