The recent surge in prices of oil and other commodities has come prematurely, says Goldman Sachs, arguing that lower prices are needed for markets to rebalance. Oil prices have rallied more than $10 a barrel in less than a month, as investor sentiment started changing after decade-low prices forced producers across the globe to cut production. [O/R] However, an early rally in oil prices would prove self-defeating as it would limit the supply curtailments that are necessary to rebalance the market in the second half of 2016, the bank said in a note to clients. “Energy needs lower prices to maintain financial stress to finish the rebalancing process; otherwise, an oil price rally will prove self-defeating as it did last spring,” Goldman Sachs said. The bank expects volatility in the oil market to continue, with prices fluctuating between $20 and $40 a barrel in the near-term. The oil market will rebalance by the end of the year, only if prices stay around the levels seen in January and February, it said. “Only a real physical deficit can create a sustainable rally,” the bank said.