NEW YORK: Oil slumped 5 percent to near six-year lows yesterday, accelerating its months-long rout after Goldman Sachs slashed its short-term price forecasts and Gulf producers showed no signs of curbing output.
Brent was down $2.34 to $47.78 a barrel by 11:47am EST (1637 GMT), after dropping as low as $47.18 to its lowest since April 2009. US crude oil was down $1.98 at $46.38 after earlier hitting a low of $45.90, also near six-year low.
Analysts at Goldman Sachs cut their three-month forecasts for Brent to $42 a barrel from $80 and for the US West Texas Intermediate contract to $41 from $70 a barrel. The bank cut its 2015 Brent forecast to $50.40 a barrel from $83.75 and US crude to $47.15 a barrel from $73.75.
Despite declining investments in US shale oil, the main driver in the current supply glut, production will take longer to come down, Goldman said in a report.
Tariq Zahir of Tyche Capital Advisors said a bottom was hard to predict as prices varied so quickly. “I figured we’d see $40 in the near term, but everything seems to be happening quicker than expected,” Zahir said. “You’re going to get some more margin call selling in here, there will be a bounceback that will be sharp and violent.”
Walter Zimmerman of United-ICAP said the market’s sharp changes in the last few months make it impossible to predict an average price for the year. “In today’s markets, that are so widely volatile, an average price is completely useless,” Zimmerman said. “There’s a million barrels a day of excess production,” he said. “That is what is driving the price.”
Reuters
