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Markets Update: Oil Prices Drop to Record Lows

2020-04-24

Sarah Kiernan of Goldman Sachs’ Global Markets Division gives her quick take on the latest market volatility, including investors’ reactions to record-low oil prices.  

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
Welcome to our exchanges, the Goldman Sachs markets opted for April twenty four each week chicken, with leaders across the firm to get a quick take on what they're watching in the markets object Seaward global had of corporate communications here at the firm. In today's At this hour, Curtain have America's commodity sales and c o o of our global commodities business as part of our global markets. Division welcome The problems are they rush. Things are changing our last year Yeah? We wanted to do in person this time, while, but at least I can see your face, soaps are it's hard to escape conversation on oil, everyone's watching the oil market this week in particular. What's the headline the year, following you mean the headline is the highlighting just the fact that the price settled negative? Thirty seven sixty very on Monday negative for the first time ever, is hugely important and have a paradigm shift from boys. He passed out
commodity markets or about fundamentals. But there are some some technical issues around the oil markets what's happening beneath the herd explained the fundamental said: a player isn't a funnel story with what happened on Monday was really the interplay of extreme weakness, and this is all crude market and the technical dynamics of the marketing very long going into the May contract expert on Tuesday. This market is very weak. You know I was there and I'm February we talked about demanding down three million barrels per day globally. Now down. Twenty million barrels per day is twenty. Five percent of global demand is disappear, and in April we were still having production at the record. One hundred million barrels per day, though, would damage of an imbalance. You're gonna opera has run out storage to our research team has been saying for weeks that we're going round of storage and they expect to happen now at the beginning of May.
he has now taken place. Driven Sharon's will be necessary of five million. Girls went off the market, but you don't need a brace of negative thirty, seven dollars per barrel to drive challenge, and that really happened, because the market ran into record land positioning issues because record enclosed in tee ass, a retail investor issues. So, on Monday, you had fifty five million barrels of length stole into a very weak physical market to avoid taking delivery on Tuesday and now draw this massive price. This obligation to, How are your clients thinking about this weakness in the sector in an hour? They position themselves. You see I've corporate clients in and more financial players, how they positioning themselves. Given the dislocation market,
I think, that's exactly ranked- might easily have three principal types appliance. First, our investors who are looking to gain exposure to commodities as an asset class, and I think there then came out how did they deal with the taking an integrating ass a class into their portfolios, which can actually go negative, unlike equities Orban, so you seen here, you are so that each year, which is the biggest one, try to ensure that by pushing her positions further up the current this week and that's a really topical question across that Nestor we also have hedge funds and tactical traders, I think they're starting now, given how impressed and I'm the kind of brokers I'm ways a rally and start if we take that production are flying as soon as european demand. Then the price has to go out because your again out of balance with this time, it's tight there focusing on that, as well as questions about your fundamental questions and how you value positions, how we think about all until we in our work
where and prices are no longer rounded at zero museum. He now has opened unjust and fifty cent oil puts in June, which we ve never seen before and then finally mention corporate. That's one of our biggest based its forwards. Inherently have exposure to oil prices because doesn't around these are the reason. Why are the priest and gas there were already struggling with financing because they have been largely shut out of the oil market over the last few months in a year or even really before this big sell off so we're trying to work with and to think about? How do we get through this? How did they raise finance dark organs? This is in prison. grace, transfer and providing them revenue certain meter hedging which allow them to access those markets, maybe helping on fines and value and assets that they haven't fully value that has an optional, be they haven't been able to mark or even working with alternate financing solutions to help him get. The describes too well Aroun also focus on the price you have
look at the data. What's one piece of economic data or news that you're watching in the next week. I think that every week we see that yeah storage numbers cut out and not just shows Us- was happening with the crude stocks. That week, whether were building as we ve been doing or drawings are, will see that next Wednesday, that's not as much in the marketing ban is as maybe it once was, because some pretty good data beforehand that lets people know what to expect their but will see what's happening, our getting close to reaching that storage level and the next week or so as I have not. The OPEC countries blister come into play next Friday. So if there's any news around nine orator delaying would be parish as well and then just. all things like trunk tween on IRAN, provided some citizens work for the market shortly so airlines like that they before you wrap up with the biggest thing you ve learned from
and trading in very volatile market. I think really has reinforced the importance of seeing people ideally face to face, but through things like this answer and connecting with them on a personal level and just the importance of another interpersonal relationships, remembering that when you shaking with then see how their doings he helped, people are feeling and not just giving it all about what's going on the second, even though it is incredibly volatile and I've also just learned, we knew less that just how incredibly dedicated and hard working people are across the board from the engineers to mobilize to get technological solutions didn't even know where possible out to the firms who allow ninety eight analysed to work effectively remotely from home. Traders were saying, I'm losing cried with all the markets and the sales over saying in touch with clients. People are saying in touch with clients, so it's really impressive, but it is also really emphasise how much you do like seeing each other in working together and how rewarding guy is on a daily basis, as for joining us again, Sarah look for catching up with you again soon face
so for this week's markets, update on exchanges of Goldman Sachs and for more in the big moves and oil markets took at our episode from earlier this week with Jeff Korean other leaders from across common sacks who provide an update on state of oil markets as negative prices emerged thanks for listening, hope, urban staying healthy and safe. This podcast was recorded on April twenty third, two thousand on 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 package does not constitute research or
mendacious 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, therefore, including in respect of direct indirect or consequential loss or damage, is expressly disclaimed. The views expressed in this podcast, or 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 too that listener, nor to constitute such person a client of any Goldman Sachs Entity.
Transcript generated on 2021-07-02.