Oil extended losses amid persistent concerns around the demand outlook as Goldman Sachs Group Inc. cut its price forecast again.
(Bloomberg) — Oil extended losses amid persistent concerns around the demand outlook as Goldman Sachs Group Inc. cut its price forecast again.
Brent futures traded near $73 a barrel after capping the biggest weekly drop since early May last week. Goldman made its third downward price revision for the global benchmark in six months, trimming its estimate to $86 for the end of the year on rising supplies and waning demand.
Oil in London is about 15% lower this year as fears of a US slowdown, China’s anemic economic recovery and robust Russian crude flows weigh on the outlook. Even a recent pledge by Saudi Arabia to cut more production in July failed to keep prices elevated, with traders less and less responsive. On Monday, Brent’s nearest timespread edged toward a flip into a bearish contango structure, which signals oversupply.
“Oil prices started the week on further bearish momentum,” said Keshav Lohiya, founder of consultant Oilytics. “It’s not just macro fears that are dragging oil prices down but also physical market weakness as prompt Brent flirts with contango yet again.”
There are some bullish signs, however. 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.
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