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Investors sceptical on sustainability of oil rally - Goldman Sachs

Published 12/02/2018, 08:44
Updated 12/02/2018, 08:50
© Reuters. FILE PHOTO: An employee holds a gas pump at a petrol station in Sao Paulo
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(Reuters) - Investors are wary that factors such as healthy global demand, supply disruptions and U.S. producer discipline that propelled the recent rally in oil prices were less likely to be sustainable, Goldman Sachs (NYSE:GS) said on Monday.

"Most importantly, investors remain unconvinced U.S. producer discipline will hold," the investment bank said in a note.

"That supply growth needs to be constrained voluntarily, even in the face of a more constructive demand outlook still leaves investors more focused on other metals and mining, where there is greater confidence in China policy-driven supply constraints," it added.

The bank, however, said consumers were broadly more optimistic about automobile sales and demand for U.S. crude in Asia.

The outlook for long-term automobile sales in China still looks very positive, with larger cars continuing to be a trend while the pace of energy vehicle' sales remain slow in China, Goldman added.

© Reuters. FILE PHOTO: An employee holds a gas pump at a petrol station in Sao Paulo

Oil prices rose by 1 percent on Monday, recovering some of last week's steep losses as Asian stock markets found a footing after days of chaotic trading.

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