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Oil ends down about 2 percent as Goldman Sachs cuts price forecast

Published 09/11/2015, 03:28 PM
Updated 09/11/2015, 03:28 PM
© Reuters. A customer prepares to fill up his tank in a gasoline station in Nice

© Reuters. A customer prepares to fill up his tank in a gasoline station in Nice

By Barani Krishnan

NEW YORK (Reuters) - Crude futures fell 2 percent or more on Friday after influential Wall Street trader Goldman Sachs (NYSE:GS) cut its outlook on oil, but positive sentiment from rebounding U.S. stock prices and less drilling for oil helped the market pare losses.

Goldman lowered its 2016 forecast for U.S. crude to $45 a barrel from $57 previously, and Brent to $49.50 from $62, citing oversupply and concerns over China's economy.

Germany's Commerzbank (XETRA:CBKG) also cut its oil outlook, joining a long list of banks that have downgraded crude price projections on supply glut concerns.

"The oil market is even more oversupplied than we had expected and we forecast this surplus to persist in 2016," Goldman said in a note entitled "Lower for even longer."

Citing "operational stress" as a growing downside risk, the Wall Street firm said crude could even fall to near $20 a barrel. "While not our base case, the potential for oil prices to fall to such levels ... is becoming greater as

storage continues to fill."

Global benchmarks for crude oil fell more than 3 percent initially on the Goldman announcement, then pared losses as stocks on Wall Street rebounded (SPX) and news of a lower U.S. oil rig count emerged. But toward the close, they headed lower again before finishing off their lows.

U.S. crude (CLc1) settled down $1.29, or 2.8 percent, at $44.63 a barrel.

Brent (LCOc1), the global benchmark for oil, closed down 75 cents, or 1.5 percent, at $48.59.

U.S. stocks were off their lows in afternoon trade ahead of a Federal Reserve meeting next week that could decide on an interest rate hike. Equity markets have provided direction to oil since the end of August as investors grappled with mixed fundamentals for crude.

Oil services firm Baker Hughes (NYSE:BHI) said U.S. drillers idled 10 rigs this week, cutting activity for a second week in a row in sign that price declines were discouraging producers.

Crude prices have more than halved over the past year, with Brent tumbling from nearly $120 a barrel in the middle of 2014 to below $43 last month. Prices collapsed as a global glut of crude pushed commercial and government inventories to all-time highs.

Analysts say the market is rebalancing, but high stocks will keep weighing on prices into next year.

© Reuters. A customer prepares to fill up his tank in a gasoline station in Nice

Investors shrugged off a report from the Paris-based International Energy Agency, which suggested that OPEC was successfully defending market share by keeping output steady in the face of lower prices.

Latest comments

Here. . http://www.businessinsider.com/baker-hughes-rig-count-september-11-2015-9. . rig count went down again. If we will listen Goldman, we can finish walking by foot.
"Oil's price collapse is closing down high-cost production from Eagle Ford in Texas to Russia and the North Sea,". . Yeah, don't interrupt GS short operations. Puts had to be paid and calls bought at low costs... then will come new forecasts. If not before, then when oil will be physically missing on market for delivery.
The oil producing units in syria are getting bombed because they help finance ISIL, however... these are not the only units under attack. All oil producing units are getting bombed now, by special bombs that ****all the money out of them. If prices go below $40 again, some oilpumps are going to be pretty dead, if we go to $35 the majority of oil producers will start to shut down. For the oil industry this is becoming worse than 2008 - 2009, prices have already stayed low for a longer period. The uglier it gets, the higher the oil price in the long run (more cutting of investment instead of production cuts).
At present scenario, means having no support from any corner US$32 - $33 is right and correct price.. stake holders of US$46 - $45 range may be selling out to catch this price..
Yeah, for sure... . For that price you can deliver oil by yourself. I will be buyer for sure. The producers of oil won't.
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