Goldman Sachs view of much higher prices is based on:

• demand exceeding what is currently expected
• supply staying low, inventories falling
• and markets not positioned for a rising priceThe only rational explanation in our view is destocking as commodity consumers deplete inventories at higher prices, believing they can restock once a broad softening creates excess supply. Yet should this prove incorrect and excess supply does not materialize as we expect, the restocking scramble would exacerbate scarcity, pushing prices substantially higher this autumn potentially forcing central banks to generate a more protracted contraction to balance commodity markets.
• Instead, markets appear to be pricing a soft landing outcome: minimal further increases in interest rates dissipating inflation and sufficient economic growth to keep earnings well-supported into 2023.
• In our view, macro markets are pricing an unsustainable contradiction – it is difficult to square a softening FCI, a more accommodative Fed pivot, falling inflation expectations and drawing commodity inventories.