Goldman Sachs Cuts Forecast for Oil Price in 2015

Goldman Sachs has cut the forecasts for oil prices in 2015 becoming the most bearish amongst the major financial institutions. This follows a fall of close to 25% in prices of crude during the last five months.

Analysts at Goldman said during a report just released late Sunday that they were expecting West Texas Intermediate crude, the U.S. benchmark, to drop to about $75 per barrel and that Brent crude would be $85 per barrel sometime during the first quarter of next year. The new prices are $15 below the barrel price forecasted previously of $90 and $100 respectively.

WTI might fall all the way to $70 during the second quarter with Brent possibly dropping to $80 per barrel, which would be the time oversupply is most pronounced, before it returns to levels of the first quarter, said Goldman.

The projections by Goldman contrast with ones by Paul Horsnell an oil analyst with Standard Chartered Bank. Horsnell is known for calling the long rally of the market about a decade ago. His opinion is more bullish.

Horsnell last week cut Brent for the first quarter to $98 per barrel but pared back forecasts for all of 2015 to only $5 to $105 per barrel.

On Monday, futures for Brent crude were down 0.3% to under $86 per barrel, which extends their decline even though there is less worry over the recovery of the global economy.

NYMEX crude for delivery in December was higher by 4 cents on Monday morning to $81.04 after Friday settling down by $1.08.

If WTI dropped next year to $70 per barrel, as is forecasted by Goldman Sachs, it would be the first time the benchmark crude in the U.S. had dropped to that level since 2010.

Goldman said that production outside the countries of OPEC was expected to increase, in part by Brazil and by more drilling in the Gulf of Mexico.

Non OPEC-production not in the U.S. lower 48 states has been forecasted to increase this year by 412,000 barrels a day, 573,000 per day in 2015 and 505,000 per day in 2016.

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