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In its latest note published Friday, analysts at Goldman Sachs cited the recent rebalancing in the oil prices while expecting a three-stage rally towards the cash-cost levels around $25 during May.

Key quotes

With the market’s rebalancing now in motion, we expect a three-stage oil price rally, from relief, to cyclical tightening, and finally structural repricing.

We believe the recent rally can extend further in May, back to cash-costs levels ($25/bbl for WTI).

Supplies have started to decline quickly, with signs of demand improving ahead of lockdown measures being eased.

While the inflection into a deficit is still a few weeks away, it now appears likely that the market is passing its test on storage capacity.

Market implications

Despite the price-positive update, WTI’s NYMEX Futures for June begins Monday’s trading on a back foot around $19.00 amid the fresh US-China trade war concerns.