Friday, December 18, 2015

This is why Goldman thinks oil is headed for $20

Cycle concentration marked 2004, 2008, and to a lesser degree 2011 as time to be bearish, while the majority was bullish (12/15 Review of Crude Oil). The majority, clearly growing turning more bearish and pessimistic as cycle concentrations trend toward extreme downside concentration, will be the bagholders of the decline that likely bottoms in 2017. History repeats because the majority, followers of headlines and human behavior rather than the message of the market, is blinded by the emotions of fear and greed.

Headline: This is why Goldman thinks oil is headed for $20

Goldman Sachs sees further weakness for oil due to the worsening of already weak fundamentals after OPEC held back from cutting production at its recent meeting.

The investment bank is standing by its prediction of $20 a barrel bottom—the breakeven cash cost for highly levered high-cost US shale producers. If oil prices fall below that level, companies will have to make output cuts in order to avert losses.



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