Investing.com -- U.S. crude futures fell roughly 2% after influential bank Goldman Sachs (NYSE:GS) lowered its forecast for oil prices in 2016 on Friday.
On the New York Mercantile Exchange, WTI crude for October delivery traded in a tight range between $44.17 and $45.87 a barrel, before closing at $44.72, down 1.17 or 2.56% on the session. During a volatile week, Texas Long Sweet futures moved at least 2% in a positive or negative direction on every day throughout the five day stretch. For the week, U.S. crude futures were relatively flat down by approximately 1%.
On the Intercontinental Exchange (ICE), brent crude for October delivery wavered between $47.17 and $48.94 a barrel, before settling at $48.20, down 0.69 or 1.39% on the day. The spread between the international and U.S. domestic benchmarks of crude stood at 3.48, below Thursday's level of 4.01 at the close.
Citing persistent oversupply on the global markets and weakness in the Chinese economy, Goldman Sachs slashed its estimates for the price of U.S. crude in 2016 to $45 from a previous level of $57. The prominent bank also downgraded its 2016 forecast for brent from $62 to $49.50.
"The oil market is even more oversupplied than we had expected and we forecast this surplus to persist in 2016," Goldman Sachs said in a note to investors.
U.S. crude futures are still down roughly 45% since OPEC rattled global energy markets last November with a strategic decision to keep its production ceiling above 30 million barrels per day. The strategy was aimed at driving down the price of oil to undercut U.S. shale producers, which can drill more efficiently when crude prices are more expensive. If Saudi Arabia can regain market share by driving U.S. shale producers out of the market, some analysts believe that crude prices can regain upward momentum. U.S. crude production continues to dip, as output fell by 83,000 barrels last week to 9.135 million barrels per day.
In the meantime, Goldman suggested that the current stalemate between the U.S. and Saudi Arabia could push prices down to $20 a barrel.
"Net, while we are increasingly convinced that the market needs to see lower oil prices for longer to achieve a production cut, the source of this production decline and its forcing mechanism is growing more uncertain, raising the possibility that we may ultimately clear at a sharply lower price with cash costs around $20/bbl Brent prices, on our estimates," Goldman Sachs said in the note.
Elsewhere, oil services firm Baker Hughes (NYSE:BHI) said in its weekly rig count that U.S. oil rigs last week fell by 10 to 652 for the week ending on Sept. 4. A week earlier the rig count dropped by 10 to 652, its sharpest decline in three months. It was preceded by six consecutive weeks of weekly builds.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.40% on Friday to an intraday low of 95.11, its lowest level in more than a week. With more than an hour left in Friday's session, the index was on pace to lose roughly 1%.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.