A recent Goldman Sachs survey reveals a sharply bearish sentiment among institutional investors towards crude oil, with positioning nearing the most negative levels recorded in nearly a decade. This shift comes amid growing concerns over a global supply glut in the oil market.

The survey, which included over 1,100 institutional clients across various asset classes, found that 59% of respondents are bearish or slightly bearish on crude oil. This is the weakest sentiment reading since April 2025 and approaches record lows in data that dates back to January 2016.

A record proportion of investors now see oil as their preferred short position, driven by worries that supply growth is outpacing demand. Key contributors to this oversupply include increased output from OPEC+, record production levels in the United States, and accelerating supply growth from Brazil and Guyana.

Interestingly, geopolitical events, which historically have supported oil prices, are currently reinforcing bearish sentiment. Investors believe the market can absorb disruptions due to factors such as spare capacity, non-OPEC supply growth, and existing inventory buffers. This confidence limits expectations for significant price spikes driven by geopolitical risks.

The survey highlights a broader shift in institutional investor views on oil’s risk-reward profile. Concerns over slowing global economic growth, the energy transition, and fiscal pressures now weigh alongside traditional supply-driven factors. The widespread bearishness across asset classes signals a consensus that the oil market is heading towards an era of oversupply rather than shortage.

Goldman Sachs cautions that such extreme bearish positioning might sometimes lead to short-term price rebounds. However, the prevailing trend is a move towards defensive or outright bearish oil trading strategies as investors prepare for sustained oversupply and increased volatility in energy markets.

Original Source: Eamonn Sheridan of investinglive.com