Oil continues slide as Goldman slashes forecasts
12 September 2015
The oil market has slumped with Goldman Sachs slashing its price forecasts for next year in the face of a larger glut than it originally expected.
US benchmark West Texas Intermediate (WTI) for October fell $1.29 to $44.63 a barrel on the New York Mercantile Exchange on Friday after having added almost $US2 on Thursday.
Brent North Sea crude for delivery in October, the global benchmark for oil, closed at $48.14 a barrel in London, down 75c from Thursday's settlement.
Since last Friday, both contracts have lost about three per cent.
"There's still a lot of indecision here. We've been back and forth, and we're trying to find a fair value," Carl Larry at Frost & Sullivan said.
"For every report that comes out, every prediction that comes, we're still not out of this range, between $40 and $50."
"Right now, what matters is supply, as the demand picture hasn't changed," he added.
Goldman Sachs cut its 2016 price forecast for WTI to $45 a barrel, sharply lower than its May estimate of $57.
"The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016 on further OPEC production growth, resilient non-OPEC supply and slowing demand growth, with risks skewed to even weaker demand given China's slowdown," it said.
In the worst case, the US bank projected the price of oil could tumble to near $US20 a barrel if the glut breaches logistical and storage capacity.
On the other hand, the International Energy Agency forecast that oil supplies outside OPEC would fall by half a million barrels per day next year, with US shale producers accounting for four-fifths of the decline.
Supporting that view, the Baker Hughes US oil rig continued its downward trend on Friday.