- West Texas Intermediate steadied bear $100/Bbl on Wednesday morning, following over an 8% decline yesterday
- Tuesday’s price drop was tied to concerns around a global recession with little actual change in the fundamentals
- Traders were in risk-off mode, especially in commodities, as the U.S. dollar climbed to new decade highs
- Major Wallstreet banks differ on the future direction of crude oil prices
- Goldman Sachs remains bullish
- “While the odds of a recession are indeed rising, it is premature for the oil market to be succumbing to such concerns,” Goldman Sachs analysts, including Damien Courvalin said
- “The global economy is still growing, with the rise in oil demand this year set to significantly outperform GDP growth.” (GS)
- Citibank, on the other hand, sees it in a different way
- Oil could collapse to $65/Bbl by the end of this year and slump to $45 by the end of 2023 if a demand-crippling recession hits (Citi)
- “For oil, the historical evidence suggests that oil demand goes negative only in the worst global recessions,” Citi analysts said in the July 5 note. “But oil prices fall in all recessions to roughly the marginal cost.”