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An analyst note from Goldman Sachs highlights the probabilities of the oil prices to correct 15-20%. One of the reasons cited suggests the overstretching of the quote beyond fundamental support.

Key quotes

Sees a correction in the oil price ops 15-20%.

Oil above $40/bbl incentivizes supply to return but risks to the downside have increased substantially.

Surplus inventory overhang still exists.

Tally has moved ahead of fundamentals, ‘prices are ahead of the rebalancing’.

Market implications

The news seems to keep the oil bulls cautious while the WTI drops to $38.25 during Wednesday’s Asian session.

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