NEW YORK (TheStreet) -- The freefall in crude oil prices and energy stocks in the past two days is either the beginning of a major market correction that harkens back to 2008 or simply a convenient profit-taking moment for Goldman Sachs, its clients, and any investors who choose to join the Goldman bandwagon.
A Goldman Sachs "sell" call on commodities released late on Monday was the marquee headline in sending energy stocks and commodities into a tailspin, given the investment bank's history as a commodities trading bull. The Goldman Sachs report released late on Monday announced that it was closing out its commodities basket trade. "We are recommending closing the [commodities] position for a 25% return versus a 28% target," Goldman analysts wrote on Monday. About oil specifically, Goldman's commodities call states, "Near-term crude oil price risk is becoming more symmetric. Although potential contagion risk in the Middle East and North Africa (MENA) remains elevated and has pushed prices above $125/bbl, at these price levels the risks are becoming more symmetric, which shifts the risk/reward of being long oil. Not only are there now nascent signs of oil demand destruction in the United States ... but also record speculative length in the oil market, elections in Nigeria and a potential cease-fire in Libya that has begun to offset some of the upside risk owing to contagion, leaving price risk more neutral at current levels." Market cynics argue that Goldman is simply booking profits in commodities now to provide itself and its clients with one more profitable entry point and that the long-term trend is still up and to the right. Notably, Goldman said in making its commodities call, "Although we believe that on a 12-month horizon the CCCP basket still has upside potential, in the near term risk-reward no longer favors being long the basket." In the least, Goldman alluded to the speculation that drives oil trading in its recent outlook, with Goldman Sachs chief energy analyst David Greely writing to clients this week that oil prices weren't justified by supply/demand fundamentals. "While prices are back at levels of spring 2008, supply-demand fundamentals are significantly less tight," the Goldman analyst wrote to clients. "We believe that the market will experience a substantial correction toward our $105 a barrel near-term target for Brent crude oil in coming months," the analyst predicts. Goldman is far from the first market source to state the opinion that oil prices are above fundamentals, with energy analysts and even OPEC ministers saying that current supply issues don't justify the extent of the oil prices rally. The Goldman Sachs call, though, can also be viewed as one more headline "piling on" an already vulnerable rally in commodities, energy stocks and crude oil. Other major headlines pressuring the markets include: A new report from the International Energy Agency on Tuesday citing high oil prices as a potential roadblock to further global growth. Add Comment Tweet 1 2 3 Last » Next › adsonar_placementId=1341527;adsonar_pid=879768;adsonar_ps=-1;adsonar_zw=600;adsonar_zh=280;adsonar_jv='ads.adsonar.com'; try { function DM_onSegsAvailable(segs, cust_id) { for (var i=0;i //* Global Functions *// function metadataRegisterNS(ns){ var nsParts = ns.split("."); var root = window; for(var i=0; i Dow Jones S&P 500 NASDAQ 10-Year Note 12250.78 1310.63 2750.43 34.74 Oil * 122.3 DOWN -12.8 DOWN -3.53 UP 5.64 DOWN -0.26 10 Yr 3.47% SPDR Gold 141.91 -0.1% -0.27% 0.21% -0.74% Data delayed 20 minutes Top Stories and Tools var randnum = Math.floor(Math.random() * 100) if (randnum < 45) { document.write("Ex-Dividend Date Calendar"); document.write("Cramer's Latest Picks from Mad Money"); document.write("Free: Stock Rating Reports"); document.write("Top-Rated Stocks"); document.write("Highest-Yielding Dividend Stocks"); document.write("Warren Buffett's Portfolio"); } else { document.write("10 Best Dow Dividend Stocks"); document.write("Top 10 'Buy'-Rated Stocks Under $5"); document.write("6 Precious Metals Stocks Set to Explode"); document.write("13 Ugliest Phones of the Mobile Era"); document.write("10 Celebrities Who Lost Big Financially"); document.write("8 Ag Chem Stocks With Up to 128% Upside"); } Twitter Facebook RSS Mobile App adsonar_placementId=1341369;adsonar_pid=879768;adsonar_ps=-1;adsonar_zw=320;adsonar_zh=280;adsonar_jv='ads.adsonar.com'; Brokerage Partners YAHOO.util.Event.on(window,"load",function(){ setTimeout(function(){ TSCM.util.attachScript('scr_intellitxt','http://thestreet.us.intellitxt.com/intellitxt/front.asp?ipid=10685'); },1200); }); var onespot = { account: 'thestreet.onespot.com', modules: [ { name: 'top', placeholder: 'onespot_nextclick_top' }, { name: 'bottom', placeholder: 'onespot_nextclick_bottom' } ], content_areas: [ { select: 'h1' }, { select: 'div.virtualpage', exclude: 'div' } ], autolink_exclude: 'p:eq(0), p:eq(1), table', autolink_case_sensitive: true }; Free Newsletters from TheStreetAfter the Bell
Before the Bell
Booyah! Newsletter
ETF Daily
Midday Bell
TSC Top Ten Stories Newsletter
Winners & Losers
We respect your privacy. Manage Newsletters Podcasts [Select Podcast] The Real Story Wall Street Confidential Podcast Daily RSS UpdatesTheStreet Mobile Edition
Connect with TheStreet
YAHOO.util.Event.on(window,"load",function() { try { var loginlink = YAHOO.util.Dom.get("logonoff"); var cookie = new UserStatus().streetCookie; if(cookie.indexOf('|')== -1){ loginlink.setAttribute("href",""); loginlink.innerHTML = "Log In"; } } catch(e) {} }); TheStreet Mobile | MainStreet | StockPickr | BankingMyWay | Jim Cramer | Doug Kass | RealMoney | Try Action Alerts PLUS TheStreet Corporate | Home | About Us | Advertise | Customer Service | Employment | Privacy Policy | Sitemap | Topic Archive | Video Archive | Stock Quotes Online | Terms of Use if (document.location.href.indexOf("/print/")!= -1){ var tsclogo = "tsc_logo200x41"; } else { var tsclogo = "tsc_logo190x39"; } document.write('TheStreet\'s enterprise databases running Oracle are professionally monitored and managed by Pythian Remote DBA.
Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions.
TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.
IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.
*Oil Data in Market Overview is Brent Crude Pricing
© 1996-2011 TheStreet.com, Inc. All rights reserved.
'); TSCM.ads.AdPlacerx.sz = "728x90"; TSCM.ads.AdPlacerx.resetTargets(); TSCM.ads.AdPlacerx.calltype = "adj"; TSCM.ads.AdPlacerx.includeDcopt = true; TSCM.ads.AdPlacerx.additionalTargeting = ";;storytype=opinion;kval=opinion"; TSCM.ads.AdPlacerx.writeTag(); TSCM.ads.AdPlacerx.sz = "233x224"; TSCM.ads.AdPlacerx.resetTargets(); TSCM.ads.AdPlacerx.calltype = "adj"; TSCM.ads.AdPlacerx.adtype = "cau"; TSCM.ads.AdPlacerx.additionalTargeting = ";;storytype=opinion;kval=opinion"; TSCM.ads.AdPlacerx.writeTag(); TSCM.ads.AdPlacerx.sz = "336x280,336x850,300x250,468x648"; TSCM.ads.AdPlacerx.resetTargets(); TSCM.ads.AdPlacerx.calltype = "adj"; TSCM.ads.AdPlacerx.additionalTargeting = ";;storytype=opinion;kval=opinion;;storytype=opinion;kval=opinion"; TSCM.ads.AdPlacerx.writeTag(); /** * function wrapper that places all DART ads using TSCM.ads.positionToPlaceholder * if positionToPlaceholder can't find the elements specified, it just returns and is ready for the next call */ TSCM.ads.placeLazyLoadingAds = function() { // DART 1 (banner) TSCM.ads.positionToPlaceholder({ ad: 'ad728x90', placeholder: 'bannerContainer', flexibleHeight: false }); //DART 2 TSCM.ads.positionToPlaceholder({ ad: 'customUnit', placeholder: 'cauContainer', flexibleHeight: true }); //DART 3 TSCM.ads.positionToPlaceholder({ ad: 'boxAd', placeholder: 'boxAdContainer', flexibleHeight: true }); //DART 4 TSCM.ads.positionToPlaceholder({ ad: 'secondBoxAd', placeholder: 'secondBoxAdContainer', flexibleHeight: false }); }; TSCM.ads.placeLazyLoadingAds() window.setTimeout(function() { TSCM.ads.placeLazyLoadingAds() }, 2000); window.onresize = function() { setTimeout(function() { TSCM.ads.placeLazyLoadingAds(); }, 1000); }; function lazyLoaderVisibility() { YAHOO.util.Dom.setStyle("lazyLoadedObjects", "visibility", "visible"); } YAHOO.util.Event.onDOMReady( lazyLoaderVisibility ); var _gaq = _gaq || []; _gaq.push(['_setAccount', 'UA-6534317-1']); _gaq.push(['_trackPageview']); _gaq.push(['_setCustomVar', 1, // This custom var is set to slot #1. Required parameter. 'gwo2', // The name acts as a kind of category for the user activity. Required parameter. 'gw-' + getcombo_ga2("7-0-0"), // This value of the custom variable. Required parameter. 2 // Sets the scope to session-level. Optional parameter. ]); _gaq.push(['_trackEvent', 'recommended', 'LOADED']); (function() { var ga = document.createElement('script'); ga.type = 'text/javascript'; ga.async = true; ga.src = ('https:' == document.location.protocol ? 'https://ssl' : 'http://www') + '.google-analytics.com/ga.js'; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(ga, s); })(); /* */ var disqus_shortname = 'thestreet'; (function () { var s = document.createElement('script'); s.async = true; s.src = 'http://disqus.com/forums/thestreet/count.js'; (document.getElementsByTagName('HEAD')[0] || document.getElementsByTagName('BODY')[0]).appendChild(s); }()); BF_BB_DATA = null; (function( ){ document.write(''); var sid="76IOF7"; var c=""; var b=""; BF_BB_SCRIPT=document.createElement('script'); BF_BB_SCRIPT.type="text/javascript"; BF_BB_SRC="http://buzzbox.buzzfeed.com/wd/BuzzBox?sid=" + sid + c + b + '&it=1&cb=' + (new Date()).getTime(); setTimeout(function() { document.getElementById('BF_BUZZBOX').appendChild(BF_BB_SCRIPT); BF_BB_SCRIPT.src=BF_BB_SRC; },1); })();Before the Bell
Booyah! Newsletter
ETF Daily
Midday Bell
TSC Top Ten Stories Newsletter
Winners & Losers
TheStreet Mobile Edition
Connect with TheStreet
Read Full Article »