Crude down on Goldman gloom, Saudi stubbornness & global glut
Oil prices dropped over two percent on Friday, following Goldman Sachs predictions of crude at $20 a barrel due to global oversupply. Saudi Arabia, the world’s largest oil producer, added to the pressure, dismissing OPEC’s emergency summit, which was aimed at stopping crude’s slide.
October Brent fell $1.03 to $47.86 a barrel in Friday’s trading session at 14:00 GMT. US benchmark WTI futures for October were down $1.09 at $44.83.
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“The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016 on further OPEC production growth, resilient non-OPEC supply and slowing demand growth, with risks skewed to even weaker demand given China’s slowdown and its negative EM feedback loop..,” Goldman analysts said.
Goldman cuts #oil forecast. Sees 2016 WTI at $45/bbl vs $57 previously. Rising risk oil could drop as low as $20. pic.twitter.com/5isWT5HG3t— Holger Zschaepitz (@Schuldensuehner) September 11, 2015
The bank cut its 2015 Brent price forecast to $53.70 a barrel from $58.20, and predicted 2016 Brent prices at $49.50, down from its earlier $62 forecast. It also cut its 2016 estimate for West Texas Intermediate oil to $45 a barrel from an earlier projection of $57.
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OPEC’s kingpin Saudi Arabia said the cartel’s meeting would fail to produce concrete action towards defending oil prices, Reuters reported, citing unnamed sources. The comments followed a meeting of Gulf oil ministers in Doha, where Venezuela’s proposal for an OPEC and non-OPEC summit was discussed.
OPEC, which is expected to boost crude production despite the glut in the global oil market, earlier this month signaled a possible change of stance. The cartel said it might cut output and stands ready to talk to all other producers. Experts, however, say the OPEC’s statements are not important without a change of policy by its largest producer Saudi Arabia.
The cartel of the world’s 12 major oil producers, OPEC is currently pumping at near-record levels. The output hit a three-year high in July when it pumped almost 32 million bpd, which is two million more than the targeted 30 million.