(Bloomberg) – Oil extended its losses amid lingering concerns about the demand outlook as Goldman Sachs Group Inc. cut its price forecast again.
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Brent crude futures fell below $74 a barrel after capping a 1.8% drop last week, the biggest weekly decline since early May. Goldman made its third downward price revision to the global benchmark in six months, lowering its estimate to $86 for the end of the year due to higher supply and lower demand.
Oil in London is down around 14% this year, with fears of a US slowdown, China’s anemic economic recovery and robust Russian flows weighing on the outlook. Even a recent promise from Saudi Arabia to cut production further in July failed to keep prices high as traders became increasingly unresponsive. The immediate gain after the restrictions announced a week ago only lasted a day.
“We are at a time when markets are willing to bet that demand risks could overwhelm Saudi Arabia’s ability to raise prices,” said Vishnu Varathan, head of economics and strategy for Asia at Mizuho Bank Ltd. weighing on the outlook, he added.
There are, however, some bullish signs. Hedge funds boosted bullish bets on Brent and West Texas Intermediate crude in the week ended June 6. The US Federal Reserve is also expected to ignore an interest rate hike after a year of hikes, a move likely to support energy demand.
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