Only days post the slashing by OPEC of its demand forecast for oil as a result of slowdown in the economy of China due to Covid-19 and some moments ago, Goldman had doubled down on the take of bearish oil and has cut the target of oil prices by $10 to a level of $53 in the quarter 1 through the year end because of what it has now been estimating a loss of 4 million barrels per day from China.
In a note which has come from Damien Courvalin from Goldman, he has written that the uncertainty fundamentally in the market of oil is very high and he adds that the loss of demand from China and World from the outbreak of coronavirus has been significant but is remaining unknown in both duration and scale while scale and timing of a production cut of OPEC+ has been remaining at a highly uncertain level.
As per the result, in the first attempt for measuring the hit on the demand of China is pointing to reach a peak of 4 million billion per dollar loss in the demand currently.
Making an assumption in a gradual recovery by the month of May is going to bring 2020 demand of the world growth to a better level year on year and is going to also produce a surplus. Although, in the case of OPEC+ had managed to agree a cut of 0.5 million barrels per day cut in the year 2020 with the prior cuts which are going to lead to the normalized inventories by the end of the year.
Putting its focus on China, Goldman has written that the current surplus is appearing to be contained to China.