Why Goldman Sachs Says $30 Oil Isn't Proof of Weak Demand
- Brent spreads signal that demand isn't driving the rout
- Prices low enough to cause `fundamental change' in supply
Is U.S. Dollar Strength Driving Oil Lower?
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Oil’s collapse to $27 a barrel last week spurred concern that, on top of the existing oversupply, the market is facing a demand crisis. Goldman Sachs Group Inc. thinks that’s wrong.
Over the past six weeks, long-term oil futures -- for deliveries in five years’ time -- have fallen even harder than prices for immediate supplies. That’s a sign to Jeff Currie, Goldman Sachs’ head of commodities research, that the latest rout wasn’t driven by fading oil consumption. When demand is weak, that gap -- or timespread -- would widen rather than narrow, he says.