With oil storage capacity running out, the market is in for a violent rebalancing and the price volatility is likely to remain exceptionally high over the coming weeks, according to analysts at Goldman Sachs.
Key points
The output will soon need to fall sizeably to bring the market into balance, finally setting the stage for higher prices once demand gradual recovers.
This inflection will play out in a matter of weeks, not months, with the market likely forced to balance before June.
West Texas Intermediate’ spot price and June contract are likely to remain under pressure in the short-term due to oversupply concerns and the negative impact of potential rollover of long positions from the June to the July contract in early May.
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