Oil: Lower for Even Longer

Goldman Sachs Exchanges

Goldman Sachs

Business

4.4 • 1K Ratings

🗓️ 17 September 2015

⏱️ 23 minutes

🔗️ Recording | iTunes | RSS

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Summary

Jeff Currie, global head of Commodities Research at Goldman Sachs, explains why prolonged oversupply and steady production out of the US and OPEC will continue to hold down oil prices, and the feedback loop driving down commodity prices around the world. This podcast was recorded on September 11, 2015. All price references and market forecasts correspond to the date of this recording. This podcast should not be copied, distributed, published or reproduced, in whole or in part. The information contained in this podcast does not constitute research or a recommendation from any Goldman Sachs entity to the listener. Neither Goldman Sachs nor any of its affiliates makes any representation or warranty, as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. The views expressed in this podcast are not necessarily those of Goldman Sachs, and Goldman Sachs is not providing any financial, economic, legal, accounting or tax advice or recommendations in this podcast. In addition, the receipt of this podcast by any listener is not to be taken as constituting the giving of investment advice by Goldman Sachs to that listener, nor to constitute such person a client of any Goldman Sachs entity. Copyright 2015 Goldman Sachs. All rights reserved.

Transcript

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0:14.2	This is exchanges at Goldman Sachs where people from our firm share their insights on developments currently shaping markets, industries in the global economy.
0:17.2	I'm Jake Stewart, Global Head of Corporate Communications here at the firm.
0:21.5	A summer sell-off in the commodities markets has seen oil
0:24.3	continue its year-long fall with base metals now joining in. Jeff Curry, global head
0:29.5	of commodities research at Goldman Sachs, is here today making his second appearance on the
0:34.2	on the podcast. Congratulations, you're the first repeat guest.
0:36.8	Great to be here.
0:38.6	We'll talk about competing views on oil and how volatility in China is having an impact on the global marketplace.
0:44.2	Jeff, welcome to the program.
0:45.2	Thank you.
0:46.2	When we first had you on in January, you just put out a research report, the new oil order,
0:52.4	that explored the implications of shale production in the US
0:55.3	and its impact on global energy markets. Oil was low then, but it's lower now.
0:59.6	And your latest research posits that this low price environment could be around for a while.
1:04.8	How is your thinking evolved on the topic since that report was first published earlier
1:08.4	this year?
1:09.4	Well, when you look at the basic tenets of the new oil order. One of the key tenants is this idea that
1:15.8	capital needs to be sidelined and the reason for that is the time to build and
1:21.5	shale is far lower than we've ever seen in any other commodity.
1:25.2	And what do I mean by time to build?
1:27.2	Time to build is the period between when you commit capital and when you get production.
1:32.4	You take the large ultra deep water projects in Brazil, that time to build is roughly 11 years
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