A recent survey by Goldman Sachs indicates that geopolitical factors are contributing to a bearish outlook on oil among institutional investors. The survey, which included over 1100 Goldman clients across various asset classes, revealed that more than 59 per cent are either bearish or slightly bearish on crude oil. This sentiment is close to the record lows observed in the monthly dataset that dates back to January 2016. The only time investors were more negative was in April, when former President Trump threatened tariffs on many US trading partners.
Adding to this bearish sentiment, a record number of institutional investors indicated that oil was their preferred short position. The survey was conducted between January 5-7 by Goldman Sachs’ Marquee MarketView. The negative sentiment comes as oil recorded its worst performance since 2020 last year, after OPEC+ increased output, the US reached record-level pumping, and countries including Brazil and Guyana boosted supply.
Brent crude oil, the international benchmark, was trading above $US61 a barrel on Thursday. Although this is off recent lows, it still represents a significant drop compared to last year. The existing oil glut is expected to increase this year. Also impacting the glut is a potential resolution to the Russia-Ukraine war, which could eliminate supply disruptions and sanctions on Russian crude oil.
