West Texas Intermediate crude extended its rebound from below $80 a barrel as Goldman Sachs Group Inc. said the market isn’t oversupplied. Brent advanced in London.
Futures rose as much as 2.1 percent in New York, rallying for a second day from a 27-month low of $79.78 a barrel. Prices are still headed for a third weekly loss, having moved into a bear market amid speculation that Saudi Arabia and other members of the Organization of Petroleum Exporting Countries will hold off from supply cuts. The decline is “too much, too early” because a crude glut is yet to materialize, according to Goldman Sachs.
Oil is paring its collapse as banks including BNP Paribas SA and Bank of America Corp. predict the rout may be over. They’re counting on OPEC to reduce output as the U.S. pumps the most oil in almost 30 years and world demand growth slows. Saudi Arabia and Kuwait indicated the price fall doesn’t warrant immediate production cuts, while Iraq plans to increase exports next month.
“Prices have likely overshot to the downside,” Jeffrey Currie, Goldman’s head of commodities research in New York, said in a report e-mailed today. “This leaves us near-term constructive, despite being long-term bearish.”