One day after Goldman muppet’d its clients with a reassuringly bullish note, WTI Crude has crashed back to a $50 handle near its lowest levels since Oct 2017 (sending HY credit risk spiking near two-year wides).
USD strength is not helping…
As a reminder, here is Goldman:
Goldman Sachs Group – which has been urging its client to keep buying oil all the way down from its recent highs and well into the current bear market – remains undaunted by the sell-off in raw materials and is forecasting returns of about 17 percent in the coming months, describing the current situation as unsustainable and touting this week’s G-20 meeting in Buenos Aires as a potential turning point; specifically the bank expects an OPEC supply cut and its announcement will lead to a recovery in prices. It advises going long on short-dated Brent.
“Given the size of dislocations in commodity pricing relative to fundamentals — with oil now having joined metals in pricing below cost support — we believe commodities offer an extremely attractive entry point for longs in oil, gold and base,” Goldman’s chief commodity strategist Jeffrey Currie said in a report.
The note listed its top 10 trade ideas for 2019, including a rebound in Brent as OPEC cuts supply.