Goldman Sachs Group Inc. is
“extremely bullish” on commodities, amid a supercycle that has the potential to
last for a decade, according to Jeff Currie, the bank’s global head of
The new year has started against
a backdrop that includes record dislocations in energy, metals and agriculture,
and significant amounts of money in the system, Currie said in a Bloomberg
Television interview. In addition, investment positions in commodities are low,
“The best place to be right now, particularly
given the Fed pivot, are commodities,” Currie said, referring to the U.S.
Federal Reserve’s decision to begin hiking interest rates
later this year. “We think you’re going to see another year of out-performance
of commodities and real assets more broadly.”
Goldman stated in October 2020
that commodities were beginning a supercycle that could last years and possibly
a decade. The oil market, in particular, could tighten, even with the OPEC+
alliance incrementally adding supplies to the market, as the pandemic
continues to threaten demand and investment.
The only two countries in the
world that can produce more oil today than they could in January 2020 are Saudi
Arabia and the U.A.E., Currie said. “Every other country in the world
struggles” to hit its pre-pandemic level.
Goldman Sachs’s target price for
Brent crude in the first quarter is $85 a barrel, but that was under the
assumption that Iranian production would return later in the year — which is
looking increasingly unlikely — he added. The global benchmark is currently
trading around $81 a barrel.
“This market has the potential to
get very tight going over the course of next 3-6 months,” Currie said.