The US investment bank Goldman Sachs, which was trying to push a bullish case for the oil by citing depletion of floating inventories thanks to OPEC and N-OPEC agreement to reduce supplies is back on the bearish side once again. Goldman Sachs slashed its three-month price forecast for WTI to US$47.5 per barrel from US$55 per barrel, citing output gains in Libya and Nigeria as jeopardizing OPEC’s efforts to reduce global inventories. According to the bank, the cartel may have to cut deeper in order to prop oil prices. However, the energy minister of the United Arab Emirates slashed expectations of deeper production cuts, speaking on the sidelines of the International Energy Agency’s Paris conference.

The oil price is trading higher this week, after five weeks of consecutive decline since the OPEC’s extension agreement. WTI is currently trading at $45.3 per barrel. The price has reached our initial target of $42 per barrel and we suspect the bearish momentum to continue and oil price to decline further once the correction gets done with. We would recommend adding short positions here and at rallies for our next target at $38 per barrel.

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