Oil (updates)

Oil: WTI crude oil advanced for a second day, after prices went below the US$80 mark for the first time since Jun ’12, with futures up 1% to US$83.52 per barrel, extending on yesterday’s 1.1% rebound. Investment bank Goldman Sachs opines that oil prices have likely overshot on the downside, and as such the house is “near-term constructive despite being long-term bearish”. Goldman’s comments comes a day after BofA and BNP called for a bottoming be crude’s oil collapse, guiding for oil to trade above US$80 per barrel. The bank added that despite the global oversupply, there is no incentive to store oil as forward contracts are weaker, as such this could create near-term shortages as stockpiles gets depleted. Technically, WTI’s technical readings appear to indicate that oil has been oversold, with the relative strength index (RSI) at 28. A reading of 30 typically indicates that prices have tumbled too quickly. Barclays bank however expects further downside to come before investors see a floor on oil prices, highlighting that the market is still waiting for balances to be adjusted on the supply side. OPEC members, which supplies ~40% of the world’s oil is scheduled to meet on 27th Nov in Vienna, where market watchers will keenly watch if OPEC members will decide to cut output in a bid to support prices.