All commodity markets are in a state of shortage right now, Jeff Currie, global head of commodities research at Goldman Sachs, said on Monday, noting that he had never seen anything like the current tightness in his 30-year-long career.
“I’ve been doing this 30 years and I’ve never seen markets like this,” Currie told Bloomberg TV in an interview on Monday.
“This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it,” Currie added.
Referring to the recent rally in oil prices, Goldman Sachs’s global head of commodities told Bloomberg that demand is far stronger than anyone thought because the Omicron impact was not significant. Underinvestment in supply has also contributed to the market tightness, Currie said.
In all commodities, the Bloomberg Commodity Spot Index tracking 23 energy, metals, and crop futures touched a record earlier this year, while many commodities—including oil—are in a strong backwardation in their futures prices, which signals tight markets.
Goldman Sachs basically reiterated today its very bullish view on commodities from a month ago, when it said that oil prices could reach $95 if Iran doesn’t return to the market this year, while commodities overall were set for a supercycle that could potentially last a decade.
There is still a lot of money in the system, while investment positions in commodities are very low, which is setting the stage for further upsides in oil prices and the prices of other commodities, Currie told Bloomberg in early January.
Brent traded at around $80 in early January, and has jumped to above $93 since then.
In mid-January, Goldman said that oil prices could hit $100 this year and rise to $105 per barrel in 2023, on the back of a “surprisingly large deficit” on the oil market due to the much milder and impact of Omicron on oil demand. Goldman Sachs sees Brent Crude prices at $90 a barrel this quarter, $95 in the second quarter, and $100 a barrel in the third and fourth quarters this year.
By Tsvetana Paraskova for Oilprice.com
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