Goldman's Currie says warm winter, gas price slump behind lower crude

Quantum Commodity Intelligence – The warm Northern Hemisphere winter and collapse in natural gas prices were largely behind the sharp retreat in oil prices during the back end of 2022, said Goldman Sachs Jeff Currie Wednesday.

However, Goldman's head of commodities research again reiterated his bullish outlook for oil prices and raw materials for 2023.

"Warm weather drove gas prices down sharply, particularly in Europe. That lower gas price, due to a warm winter, put a lot downwards pressure on oil," said Currie, noting benchmark TTF prices had slumped below €50/MWh this week, while US Henry Hub futures were spiralling towards $2/mmBtu.

Speaking to Bloomberg TV, Currie also said that persistent US rate hikes and China's zero-Covid policy up until November had created the "equivalent of a massive recession" which also dragged on oil prices.  

"Oil demand on a global basis contracted somewhere around 2%. That led to inventory builds, hit the front end of the curve and created some contango,"  Currie told Bloomberg on the sidelines of the Goldman Sachs Global Macro Conference Asia Pacific

However, Currie said oil markets have since tightened up with Brent moving into backwardation, "which is an indication things are improving."

Currie added the broader commodities complex is poised to rally in 2023 as China's economy recovers and US inflation levels off.

"The real core of the bullish view is the recovery in China, and everything is pointing to that being A-OK," he said, maintaining his bullish outlook for commodities despite a shaky start to 2023.