- Demand concerns dominate sentiment even amid deeper Saudi cuts
- WTI drops below $68 after posting weekly decline Friday
Oil extended losses as Goldman Sachs Group Inc. cut its price forecast for the third time in six months, reports Bloomberg.
Crude bull cut crude forecast
West Texas Intermediate fell near $67 a barrel after Goldman trimmed its year-end price estimate to $86. The bank’s concerns about swelling crude supplies are weighing on a market outlook already clouded by weak demand signals.
“Beyond the fact that a vocal crude bull cut their crude forecast again, physical market indicators also are shaking confidence of bulls expecting the market to shift from a surplus to a deficit in the coming months,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. “Time spreads, which are the holy grail for traders assessing supply and demand dynamics, continue to deteriorate.”
Bullish signs
The spread between US crude’s second- and third-month contracts flipped to trade at a discount for the first time since March, signaling expectations of robust supplies in the short term.
There are some bullish signs, however. Sour crude prices in the US Gulf Coast are trading at the highest premium to WTI in a year following a pledge by the nation to buy 3 million barrels to fill strategic petroleum reserves.
Hedge funds boosted bullish bets on Brent and West Texas Intermediate crude in the week ended June 6. The US Federal Reserve is expected to skip an interest-rate hike after a year of increases, a move likely to buoy energy demand. Summer demand also remains a central focus for traders as they try to gauge actual physical demand. On the supply side, Saudi Arabia agreed to cut more production in July.
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Source: Bloomberg
