Oil: "Goldman warns of near-term downside risk in WTI"

Earlier this morning I was asking a friend if he had noted the divergence between consumable commodities and gold. Since about mid-October they've really gone their separate ways.
From FT Alphaville:

Oh my. We hope you’re sitting down because the following might come as a bit of a shock.

On Tuesday Goldman Sachs’ commodity team admitted they may have got something wrong:

The market remains caught in the tug-of-war between weaker-than-expected DM demand, which creates near-term downside risk and stronger-than-expected EM demand, which creates longer-term upside risk, leaving the market in a new higher trading range.

Emerging markets demand has continued to surprise to the upside over the past months, yet this failed to offset the lag in developed market distillate demand, leading inventories to draw more slowly than we anticipated. However, the market is increasingly expecting EM demand to crowd out future OECD demand growth, and is putting upward pressure on long-dated prices, leaving the market in a new higher trading range of $75/bbl to $82/bbl.

In other words, Goldman is saying they under-estimated the size of the distillate overhang and the degree to which demand destruction was affecting OECD countries.

There was also a bit of a capitulation on the strength of the contango floating storage trade — i.e. while stocks might have been falling onshore, offshore stocks – much more difficult to monitor — were coming in to compensate...MORE