Investors Turn Most Bearish On Oil In Almost 10 Years, Goldman Finds

Geopolitical factors are helping push institutional investors close to their most bearish view on oil over the past 10 years as the global market stares down a glut, a survey by Goldman Sachs Group Inc. finds.

More than 59% of over 1,100 Goldman clients across asset classes are bearish or slightly bearish on crude, according to the survey released Thursday. That places sentiment just off record lows in a monthly dataset dating back to January 2016.

The only time investors were slightly more negative on crude was last April, when President Donald Trump threatened sky-high tariffs on many US trading partners.

Adding to broader bearish sentiment, a record number of institutional investors said oil was their favorite short, according to the survey, which was conducted Jan. 5-7 by Goldman's Marquee MarketView.

Oil posted its worst performance since 2020 last year after OPEC+ raised output, the US pumped at record levels and countries including Brazil and Guyana boosted supply. Brent crude oil, the international benchmark, traded above $61 a barrel on Thursday, off recent lows but still down considerably from a year ago.

The glut is expected to grow even larger this year. That's before factoring in a potential end to Russia's war in Ukraine, which would likely eliminate supply disruptions and sanctions on Russian crude. 

Meanwhile, the US plans to control future sales of Venezuelan oil, bringing the South American nation's crude to market while attempting to rebuild its decaying infrastructure. Even a marginal build-up in Venezuela's production capacity in the coming months could add further to the surplus.

As of Wednesday, trend-following commodity trading advisers were 91% short in West Texas Intermediate oil, the US benchmark, according to data from Kpler's Bridgeton Research Group.