Remarks from Goldman Sachs on the oil price first up:

(Bolding is mine)

We continue to view downside risk to oil prices as the key risk to our constructive view

In addition to steeper and persistent declines in oil prices, we see three other risks to our views

  1. A sharp slowdown in China growth
  2. Current fundamental weakness across many sectors gains a critical mass and becomes a directional driver of spreads
  3. Constrained access to capital markets, a low probability event, in our view

We have been forecasting weak commodity returns since last fall

  • The extent of this weakness has far exceeded our initial expectations
  • Our negative forecasts were initially driven by the shift in the commodity supply cycle, recent GDP growth weakness and China's growth rebalancing have exacerbated negative returns

"We believe that, while nascent, the supply adjustments to date are still insufficient, and demand has either done too little to offset this s low supply adjustment (OpEx commodities), or seen outright declines (CapEx commodities). This sustains the need for lower prices for even longer, keeping us underweight commodities for the next 12 months."

OK, so that's what Goldman Sachs are saying. But maybe we should be listening to what the world's biggest oil producer says ... via the Saudi Oil Minister on CNBC:

h/t to @etleggett for the giggles!