The recent declines in oil prices were "excessive", analysts at Goldman Sachs said in their latest note released on Friday.

Key quotes

“Oil market remains in a large deficit.”

“Reiterate $85/bbl Q4 21 average forecast.”

"The magnitude of the deficit is in fact on its own sufficient to absorb the currently perceived headwinds to the oil bull thesis, with lower prices in fact reducing the odds of a strategic release.”

“Concerns over Chinese growth, its property sector, and its impact on oil demand may have contributed to oil's fall but the move lower has "overshot" that risk.”

On oil reserves release, "Such a release would only provide a short-term fix to a structural deficit.”

"In fact, if such a release is confirmed and manages to keep oil prices depressed in the context of low trading activity into year-end, it would create clear upside to our 2022 price forecast."

• WTI Price Analysis: 100-DMA guards the downside starting out a fresh week