Oil Rebound As Goldman Sees no Over Supply

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.”

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza