Oil is off more than 4% this week, falling below $111 after having hit $116 Friday, as fears of an imminent Syria strike fade.
Goldman's Jeffrey Currie says the markets are over-doing the sell-off, and that fundamentals remain tight.
As we have written, and as Currie reiterates, there remains 150,000 barrels a day-worth of production outages in Libya, where strikes have closed key ports and oil fields.
There are also ongoing disruptions in Iraq.
Plus, Western inventories remain quite low.
So prices are likely to bump back up:
Against this backdrop, we see the current sell-off as likely overdone and maintain our near-term Brent price forecast of $115.00/bbl as we expect the pressure on OPEC spare capacity to peak in September and October 2013 at the same time that OECD petroleum inventories are at their lowest level since mid- 2004.
One oil trader has also told us WTI is also likely to remain elevated, as lower storage levels at the Cushing, Okla. are off 40% since June.
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