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Crude oil prices are on their way up, despite the market panic caused by the collapse of two U.S. banks, the global head of commodities for Goldman Sachs said on Friday in a Bloomberg Television interview.
“We would argue you are buying the dip at this point,” Jeff Currie said, adding, “I have never seen a market sell off that sharply, but retain a bullish structure.”
Goldman is still a believer that we will see a “solid recovery” from China toward the latter part of the year, as economic activity snaps back from its strict covid lockdowns.
China activity—and therefore oil demand—has shown signs that it could be ready to take off, although a market panic over the possibility that two U.S. bank failures could start a contagion has threatened the would-be rally. WTI prices began to fall off their $122 highs in early June of last year, trading between the low $70s and $80s for the better part of this year. But two weeks ago, when news broke of the SVB bank collapse, WTI sank further, to just $66.93 per barrel.
Last week, Goldman said that it expected higher oil prices 12 months from now, pointing to a forecast demand increase in China to more than 16 million barrels per day. Goldman was bullish on commodities then, remarking that the ouflow of capital from the energy industry would result in shortages that will manifest later this year—something oil titan Saudi Arabia has said for the better part of a year.
Most analysts are expecting China’s oil demand to grow over the next few months, despite average oil imports across January and February in China being lower than last year’s. January and February oil demand in China are typically weaker due to the Lunar New Year holiday.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.