Is it safe to reverse & # 39; back in the near oil market, namely the product experts & # 39; Goldman Sachs.
Indeed, Jeff Currie of & # 39; Goldman believes that after the worst session & # 39; One drop for crude oil in the United States in three years, it's time to consider investing in & # 39; distant subject, in the last week withdrawal approfiet by the sound market, characterized as a catch & # 39, at least 20% from a recent peak.
Check out: 7 main reasons that the "bottom is falling & # 39; ' of the Black Friday oil prices
While he was speaking on Monday & # 39; Monday at the end of Monday, Currie said the recent fight & # 39; sales & # 39; crude panick not reflect b & # 39; precisely the fundamental principles of supply and demand "
His remarks on CNBC reflect similar comments made in the report & # 39; research & # 39; Goldman Sach 26 & # 39; November: "Although it & # 39; be tempted to attribute foreign policy & # 39; the United States, the current basic principles remain intact and price reduction is too large. Instead, commodities are pricing outlook & # 39; more directional demand than classes & # 39; other assets, beyond the potential imposition of supply. So with & # 39; clearly something another is wrong, "the researchers bank & # 39; investment scripted.
Instead, Currie said crude iżmerkur is more of & # 39; technical, and jattribwitu traders placing bets on the much extra on the dealers, the rising prices, which in turn had dissolved; and, on the other hand, accelerated the recent decline of the lift lower for black gold.
The researcher commodity followed closely said, "m & # 39; there is no indication of & # 39; demand as the recession", referring to mounting fears that the persistent slump and stunning oil from hit a & # 39; 52 weeks hit on October 3. Slow Decline in Europe and concerns that commercial silezza between the US and China was exercising downturn in & # 39; Beijing also foster anxiety among investors.
Those worries also whacked markets & # 39; equity, with the Dow Jones Industrial Average
DJIA, + 1.00%
S & P 500 Index
SPX, + 1.01%
and the Nasdaq Composite Index of
COMP, + 1.22%
while increasing their worst performances during the period & # 39; commercial Thanksgiving distributed from 2011, forcing the S & P 500 in & # 39; correction, usually defined as a reduction of & # 39; at least 10% from a recent peak.
What will take oil (and other commodities for that matter) higher?
Repeated comments in the report & # 39; Monday research – said face meeting & # 39; surface side of the group & # 39; 20 meeting Friday in & # 39; Bus Buenos Aires between President Donald Trump and China President Xi Jinping can provide the catalyst rough lifts, if this results in & # 39; at least stay in tensions between Beijing and Washington.
Currie said that Goldman is predict the chance of & # 39; 40% occurring pause in hostilities in tariff convention, b & # 39; 10% probability of & # 39; Direct resolution & # 39; any kind. Goldman believes that China has an incentive to resolve its trade gap given the apparent willingness on the second largest economy of the word. "Although uncertainties remain high, we believe that the G-20 & # 39; this week you & # 39; be a catalyst for the commodities come back. Most of the political uncertainties weighing on commodity -swieq have a significant chance of being addressed in & # 39; Bus Buenos Aires, "Goldman wrote.
The other key driver for cutting can & # 39; be the sixth meeting & # 39; December & # 39; the Petroleum Exporting Countries Organization and other key oil producers in Vienna. Currie expects production cuts occurring at the meeting and says that such a move is in the best interest of all parties, despite repeated opposition of President Donald Trump to lower prices crude from Saudi Arabia and OPEC.
Decline in crude oil prices is seen by Trump as tax cuts for average consumers, but Goldman underlines that lower oil can & # 39; have detrimental effects on credit markets and sector tailored US
XLE, + 1.38%
The Goldman analysts say that the so-called break-even levels, the cost it takes to crude extract, the oil shale oil producers is between $ 50 a barrel and $ 55, and the level a & # 39; breach hurt revenues for major clothing & # 39; power.
In addition, Currie said that 15% of debt b & # 39; high performance issued by energy-related entities and further reduce the risk of giving a sigh of & # 39; punishment to the balance sheets & # 39; those companies digging, transporting and b & # 39; otherwise deal of energy products. "If you go below $ 50 [a barrel], … it becomes the credit market problem, "he told CNBC (see table under & # 39; below).
Read: Why oil prices are now declining net nġir on the economy & # 39; USA
From Monday & # 39; morning, January & # 39; West Texas Intermediate crude
CLF9, + 2.46%
was & # 39; $ 1.70, or 3.4%, to $ 52.12 a barrel on the New York Mercantile Exchange. F & # 39; abbreviated holiday session on Friday, the contract fell 7.7% to settle at $ 50.42, marking the worst session since 6 & # 39; July 2015 and the lowest solution 9 & # 39; October 2017, according to Dow Jones Market Data.
Meanwhile, Goldman said reducing trade tensions can & # 39; also boosts complex products with & # 39; widely as & # 39 ;, including copper prices
and other industrial metals, long recession is not maintained.
"Because commodities are spot assets and current price growth, they typically act as diversified assets in oil prices and commodity rotating until the macroeconomic concerns become full recession, which reduces demand for commodities. However, we see no such demand that weakness, "wrote Goldman.