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The controversy is on over whether or not the U.S. is in a recession , however Goldman Sachs’ prime vitality analyst says one key indicator just isn’t flashing warning indicators: commodity markets. Jeff Currie, the agency’s international head of commodities analysis, stated that demand for commodities stays robust, suggesting the U.S. just isn’t in a recession. “In the event you have a look at international demand for commodities — oil and metals collectively — the recession was again in April and Could when China went via the extreme lockdowns,” he stated Monday on CNBC’s “Squawk Field.” “The general demand image — it is nonetheless rising.” Currie famous that whereas a slowdown is happening, demand just isn’t contracting. This “key level,” as he known as it, is getting misplaced within the broader narrative, which has grow to be one among demand loss and tumbling oil costs. “The truth is that the underlying image is slower demand development after a really torrid tempo earlier this yr and never an outright contraction,” he stated. In the end, the bodily and monetary markets are telling totally different tales. However the fundamentals level to a still-tight market. Currie famous that even when the economic system does tip right into a recession, it is prone to be broad-based and shallow. That is a lot totally different from the circumstances in 2020, when international lockdowns sapped demand for oil and petroleum merchandise. Oil costs have fallen from their current highs in March, when Russia’s invasion of Ukraine despatched crude surging to the best degree since 2008 . West Texas Intermediate crude , the U.S. oil benchmark, shed 4.8% on Monday to commerce at $93.88 per barrel. Worldwide benchmark Brent crude stood at $100.26 per barrel, for a lack of 3.6%. Each benchmarks traded above $130 in March . Currie expects oil to regain that degree. Demand continues to be rising as economies worldwide proceed to emerge from the pandemic. “The upside over the subsequent three to 6 months is substantial,” he stated, reiterating his $130 end-of-year goal for Brent. “Bodily the market is in a deficit nonetheless. The pullback in costs will stimulate extra demand,” he stated. Currie stated demand may enhance by a further 1 million barrels per day. And that does not take into accounts the discharge of oil from the Strategic Petroleum Reserve, which is about to cease come October. “We’d argue in vitality the upside potential to achieve new highs within the second half of this yr continues to be very, very excessive,” Currie stated.
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