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Oil: I Don't Trust Goldman Sachs

ByMike Paulenoff
Published 09/11/2015, 03:41 PM
Updated 07/09/2023, 06:31 AM

Truth be told, I have a tough time reconciling the reaction to Goldman Sachs' (NYSE:GS) $20 fundamental scenario with my near- and intermediate-term technical set-ups.

I would have thought NYMEX oil could be down considerably more than it is -- or has been -- so far.

At its weakest, oil hit a low of $44.16, down 3.5%, but as I type, it's down 1.8% in the aftermath of a very-bearish report from GS.

What's intriguing is that oil remains within the confines of a digestion period between $49 and $43, in the aftermath of it sharp late August up-move from $37.75 to $49.33.

The price pattern off of the 8/24 low, coupled with the positive juxtaposition of two of my underlying momentum gauges, suggests strongly that oil is in the midst of an incomplete recovery rally that has unfinished business to the upside once the contained digestion period runs its course.

The fact that the GS report has not triggered a break beneath the digestion-period lows ($43.20) is a sign of impressive relative strength -- so far.

Daily Light Crude Oil

Latest comments

If Goldman say something, u have to do the exactly opposite. Maybe the oil go down for some weeks, but, it's a great oportunity to buy, i think there is a selling climax, and soon, we gonna have a bull market.
WTI can go down maimum $30,and even if Iran pumps in the oil and American oil producers suffer,now Iran and Saudi Arabia cannot sustain$30 for a long time.. . And Goldman is a big ????????. will not trust them at any point for anything?. I completely agree on WTI with u.
A sneaze from SUADIA ARABIA will send oil to $75 pb. Opec countries are putting pressure on Saudi's to do something and Russia is getting involved. Saudi is addicted to being liked, so they will give in soon. Overnight America will wake up and oil will be opening at 60pb and oil Bears will be running for the caves!
You don't have to trust Goldman Sachs who predicted $20/30 oil price in near future, 6month - 1 year. A lot of oil bulls bash EIA not providing real time data.. . However, +9mbpd production and 458mb inventory from EIA tell me that the low price oil will last for a while. The fundamentals won't change over night.
If it does go to 30s again it won't be for long. Rig cuts started happening a very long time ago and existing wells don't put out like new ones. Eventually demand outweighs production in the near future. The rig counts this winter will be a very good indication of what will happen next year. We are coming into freeze up and drilling season. My bet is that the rig count doesn't come anywhere near what it has been in the last 5 years. Inventory will drop like a rock because drilling and completion "won't change over night".
Maybe it goes back to $30. But not for long. There is an army of rigs that haven't been doing anything for a very long time. Old wells slow and dry up even when stimulated. With a very small amount of wells being drilled you can expect demand to outpace supply in the near future. Drilling and well completion "won't change over night" or even over a month. When we start seeing the full effect of the rig drop the supply will plummet and the price will rocket up. And Goldman is a joke... They are leaders in market manipulation. I wouldn't believe them if they told me the sky was blue.
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