Investment Banking Giant Goldman Sach’s Says Oil Could Drop to $20

Investment Banking Giant Goldman Sach’s Says Oil Could Drop to $20

The investment bank Goldman Sach’s recently released a report saying that oil prices could drop to $20/barrel, at least in the short term, USAToday reported.

“Although oil prices have revisited the lows of last winter, this time both financial and fundamental metrics are much weaker,” Goldman said in the report. “Forward demand expectations are lower as the emerging market economic outlook continues to deteriorate.”

Goldman is projecting that the price for West Texas Intermediate (WTI) crude will be about $45 for 2015, trending upward to $60/barrel by 2017.

Much of the reason for the low numbers come as a result of OPEC refusing to cut production. Traditionally the cartel has worked to raise oil prices by trimming output, but over the past year the group has publicly stated it wouldn’t do so.

Another possibility to reduce the oil oversupply would be US shale producers cutting production, Bloomberg noted.

“The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016,” Goldman analysts including Damien Courvalin wrote in the same report. “We continue to view U.S. shale as the likely near-term source of supply adjustment.”

News of the findings further depressed the market, sending WTI futures down 2%

Login

Welcome! Login in to your account

Remember me Lost your password?

Don't have account. Register

Lost Password

Register