What If Goldman Is Wrong and a Lonely Oil Bear Is Right?
With inventories low and demand high, it looks as if the bulls are calling the market right. A supply surprise may yet emerge.
Ed Morse in 2017.
Photographer: Christopher Goodney/BloombergThe oil market feels like a runaway train speeding toward $100 a barrel. Ask oil traders in Geneva, Singapore, London and Houston, and you hear the same thing: “Buy, buy, buy.” I canvassed the market over the last few days, and there are virtually no bears left. It’s a one-way street bet: long. Jeffrey Currie, a commodity strategist at Goldman Sachs Group Inc., personifies the bullish trend: “We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it, we’re out of it.”
The argument, as described by Currie, is a powerful one. It’s one I’ve subscribed to for several months, particularly in oil, gas and electricity. In oil, OPEC+ is behind the curve, adding too few barrels too slowly, in the process letting inventories decline to perilously low levels. Meanwhile, investors have accumulated huge bets above $100, $125 and even $150 a barrel that could act as magnets for prices.