Goldman Sachs: Oil Succumbs To Recession Fear

Goldman Sachs note that “oil prices collapsed today, with Brent down more than 10% from the morning highs. We view this move as driven by growing recession fears in the face of low trading liquidity, with technicals exacerbating the sell-off. The declines in prices and refining margins since mid-June are now equivalent to the oil market pricing in an 1.1% downward revision to 2H22-2023 global GDP growth expectations. We believe this move has overshot - while risks of a future recession are growing, key to our bullish view is that the current oil deficit remains unresolved, with demand destruction through high prices the only solver left as still declining inventories approach critically low levels.”