Oil prices could drop ‘sharply lower’ on ‘tank tops’ – Goldman Sachs

FXStreet (Mumbai) - In a recent note to its clients, the Wall Street banker, Goldman Sachs predicted that further sharp declines are in store for the black gold on the back of close to maximum capacity seen in the refined product inventories.

Goldman Sachs noted, "Distillate storage utilization in the U.S. and Europe is nearing historically high levels, following near record refinery utilization, only modest demand growth (especially relative to gasoline), and increased imports from the East on refinery expansion and Chinese exports,"

"This raises the specter of 1998 (and) 2009 when distillate storage hit capacity, pushing runs and crude oil prices sharply lower."

While Reuters commented, “Although ‘tank tops’ - a term referring to storage capacities hitting their maximum - were unlikely, Goldman said that inventories were already ‘too close for comfort’, bearing the potential for a sharp fall in crude prices.”
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