Oil prices tumble; Goldman slashes forecast
Goldman sees $75/barrel-oil for most of 2015
Bloomberg
MADRID
(MarkeWatch) — Oil futures fell sharply on Monday, after Goldman Sachs
slashed its forecast for prices, predicting West Texas Intermediate
crude will prices will spend the better part of 2015 at $75 a barrel.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December CLZ4, -0.65% slid $1.20, or 1.5%, to $79.79 a barrel. December Brent crude LCOZ4, -0.87% on London’s ICE Futures exchange dropped $1.26, or 1.5%, to $84.88 a barrel.
Goldman analysts brought forward their medium-term bearish oil outlook, as they predicted WTI crude will average $75 a barrel for the first quarter of 2015 and the second half of 2015. That’s down nearly 17% from $90 a barrel, previously. They cut their Brent forecast by 15%, to $85 a barrel, from $100 a barrel, previously. The 2016 and long-term forecasts for those oil prices are $80 a barrel WTI and $90 a barrel for Brent.
The investment bank’s “confidence in a 2015 oversupplied global oil market has increased,” said lead analysts Damien Courvalin and Jeffery Currie, who gave three reasons for the downgrades to prices:
Fawad Razaqzada, technical analyst at FOREX.com, said in emailed comments that Goldman’s bearish view has “nonetheless provided traders renewed confidence to sell oil at these already-depressed levels. The current fundamentals suggests that Goldman may well be correct. “
Another energy analyst, Commerzbank’s Carsten Fritsch, said he expected Brent and WTI would test their lows from last week but noted, “I did not expect it so quickly.”
For the rest of this week, financial markets will be focused on U.S. economic data and the U.S. Federal Reserve’s decision on its quantitative easing policy.
The strength of the U.S. dollar compared to other currencies would affect crude oil demand, analyst Daniel Ang at Phillip Futures said. “Considering the events in the week ahead, we expect to see the theme of this week’s crude prices to come from changes in the dollar index,” he added.
Nymex reformulated gasoline blendstock for November CLZ4, -0.65% --the benchmark gasoline contract--fell 5 cents to $2.1808 a gallon.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December CLZ4, -0.65% slid $1.20, or 1.5%, to $79.79 a barrel. December Brent crude LCOZ4, -0.87% on London’s ICE Futures exchange dropped $1.26, or 1.5%, to $84.88 a barrel.
Goldman analysts brought forward their medium-term bearish oil outlook, as they predicted WTI crude will average $75 a barrel for the first quarter of 2015 and the second half of 2015. That’s down nearly 17% from $90 a barrel, previously. They cut their Brent forecast by 15%, to $85 a barrel, from $100 a barrel, previously. The 2016 and long-term forecasts for those oil prices are $80 a barrel WTI and $90 a barrel for Brent.
The investment bank’s “confidence in a 2015 oversupplied global oil market has increased,” said lead analysts Damien Courvalin and Jeffery Currie, who gave three reasons for the downgrades to prices:
- Accelerating growth from non-Organization of the Petroleum Exporting Countries outside of North America that will outpace demand growth, leaving the market flush with supply
- Scale and sustainability of shale oil production that drives the global cost curve lower
- OPEC no longer acting as first-mover swing producer, with shale oil output being called upon to fill that role.
Fawad Razaqzada, technical analyst at FOREX.com, said in emailed comments that Goldman’s bearish view has “nonetheless provided traders renewed confidence to sell oil at these already-depressed levels. The current fundamentals suggests that Goldman may well be correct. “
Another energy analyst, Commerzbank’s Carsten Fritsch, said he expected Brent and WTI would test their lows from last week but noted, “I did not expect it so quickly.”
For the rest of this week, financial markets will be focused on U.S. economic data and the U.S. Federal Reserve’s decision on its quantitative easing policy.
The strength of the U.S. dollar compared to other currencies would affect crude oil demand, analyst Daniel Ang at Phillip Futures said. “Considering the events in the week ahead, we expect to see the theme of this week’s crude prices to come from changes in the dollar index,” he added.
Nymex reformulated gasoline blendstock for November CLZ4, -0.65% --the benchmark gasoline contract--fell 5 cents to $2.1808 a gallon.
