Analysts at Goldman Sachs have taken a downbeat stance on the commodities segment, downgrading the sector to underweight on a 12-month basis due to the weak outlook for oil. In a note dated May 20, the analysts said they continue “to believe that oil markets remain oversupplied and that the current price should stimulate supply from low-cost producers and put downside pressure on the oil price.” The investment bank further cut its rating on credit in the near term to neutral and kept its 12-month underweight call.
“[A] near-term risk to a constructive outlook for credit, in particular U.S. [high yield], is a weaker oil price, as credit sentiment has been closely linked to the oil price since last year,” the analysts said in the note. Goldman Sachs earlier this week reiterated its bearish outlook on oil, cutting its 2017-18 forecast for crude oil to $60 a barrel from $65.
Source: MarketWatch
