Structural underinvestment in oil and gas will put upward pressure on oil prices, Goldman Sachs’ commodities chief Jeffrey Currie told CNBC this week, commenting on commodity markets.
All markets except wheat, Currie noted, are in a deficit, and this is certainly bullish for prices. But what he calls structural underinvestment also has its part to play for the future of prices. This is particularly true for oil, where the underinvestment is not just motivated by the price rout but by the shift towards renewable energy investments.
This shift, however, may stimulate short-term demand for oil, Currie also noted, expecting it to rise over the next few years as so-called green infrastructure is being built. Afterward, as this infrastructure starts operating, there will be a negative impact on oil demand and, likely, prices.
Oil started this week with a gain as the United States began vaccinating its frontline workers, but by the end of trade, prices were on the decline again as worry about excessive supply outweighed the positive news about the vaccines.
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Source: Oil Price