• 4 minutes The Federal Reserve and Money...Aspects which are not widely known
  • 8 minutes How Far Have We Really Gotten With Alternative Energy
  • 12 minutes  What Russia has reached over three months diplomatic and military pressure on West ?
  • 4 days Coincidence of EIA Report Delay? - "I had seen it delayed minutes, and a couple of times a few hours, but don’t recall something like this — do others?" asks Javier Blas
  • 2 days European Parliament Members, Cristian Terhes et al, push back against Totalitarian Digital ID and Carbon Tyranny in Europe.
  • 1 day "How Long Will The Epic Rally In Energy Stocks Last?" by Tsvetana Paraskova at OILPRICE.COM
  • 4 days "...too many politicians believe things that aren’t true." says Robert Rapier
  • 6 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 5 days Demonising fossil fuels has caused major grid problem in Australia
  • 5 days Welcome to Technocracy - The New World Energy Order... "1000s Of Sydney Homes Plunged Into Darkness As Aussie 'Price Cap' Policy Sparks Energy Shortage"
  • 7 days "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 331 days Beware the Left's 'Degrowth' Movement (i.e. why Covid-19 is Good)
  • 9 days ESG Topic - "German Police Raid Deutsche Bank, DWS Over Allegations Of Greenwashing" - ZeroHedge Bloomberg and others
Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

Goldman Sachs: Oil Market Reaction To Omicron Is Excessive

  • The plunge in oil prices in recent days was excessive, and traders “far overshot” the potential impact of the Omicron Covid variant
  • Oil traders priced in a massive 7-million-bpd slump: Goldman Sachs
  • A number of bullish factors set off bearish ones at the end of 2021

The plunge in oil prices in recent days was excessive, and traders “far overshot” the potential impact of the Omicron Covid variant on global oil demand, pricing in a massive 7-million-bpd slump, Goldman Sachs said on Wednesday.

Oil prices collapsed on Friday after the WHO qualified Omicron as a “variant of concern,” with markets anxious about the still unknown characteristics of the new strain, especially if it escapes existing vaccine protection.

Oil just saw in November its worst monthly drop since the start of the pandemic and the first lockdowns in March 2020.

Goldman Sachs, however, is still bullish on oil and sees the massive move lower from the past few days as excessive and equal to the market pricing in a “mammoth” drop in demand over the next few months.

“To put this into context, this would represent any of these extreme outcomes: (1) not a single plane flying around the world for three months, or (2) half as intense as the 2Q20 global lockdown, or (3) a world even worst-off than before vaccinations,” Damien Courvalin, Head of Energy Research & Senior Commodity Strategist at Goldman Sachs, wrote in a note as carried by Yahoo Finance.

The investment bank expects to see more evidence of the nature of the Omicron variant and the measures governments will take before potentially changing its current outlook, Courvalin added.

Before such news arrives, Goldman Sachs reiterates its “view that the market has far overshot the likely impact of the latest variant on oil demand with the structural repricing higher due to the dramatic change in the oil supply reaction function still ahead of us.”

According to Goldman, the Omicron variant plus the SPR releases coming in a few weeks would only be a $5 per barrel downside to its $85 price forecast for the coming months, MarketWatch notes.

There are a number of potential bullish factors to offset the bearish ones, including difficult negotiations on Iran’s nuclear program, OPEC+ pausing its monthly production increase, and more gas-oil-switching, Goldman Sachs says.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • Mamdouh Salameh on December 02 2021 said:
    The reaction of the markets to the Omicron variant was indeed very excessive prompted by rising concerns and fears that it could lead to a return to the lockdown. However, there were reports that the new variant is neither more transmissible nor more dangerous than the previous variants.

    Only the final verdict from the WHO will calm the markets. Once this is done, oil prices will recoup all their losses in no time.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News