Goldman: Earnings Surprises, Not Investors Are Driving Oil Prices Lower

Last week’s oil price volatility has been blamed on investor positioning although while positioning has had an impact on prices, analysts at Goldman Sachs argue that the previous week’s declines have more to do with fundamentals that many analysts believe. In a research note published at the end of last week, Goldman’s commodities analysts Damien Courvalin and team make their case for why they believe fundamentals (specifically, positive earnings surprises) were behind the oil price move last week.

Specifically, the team believes the noteworthy move in oil prices reflected “(1) growing visibility on the sources of future supply, (2) continued positive earnings surprises of E&Ps and majors, and (3) growing evidence of the ability of US shale...