The Wall Street bank said in a report that it is “uncertain” of production cuts necessary to support prices, which raises the “possibility that we may ultimately clear at a sharply lower price with cash costs around US$20 a barrel Brent prices“. The worldwide Energy Agency predicts crude stockpiles won’t diminish until the second half of next year, and said even that forecast could be derailed if Iran can boost exports after the removal of sanctions. Total imports of Saudi crude for the week ending September 4 were 1.06 million barrels per day, down 15.2 percent from the same week in 2014.
West Texas Intermediate for October delivery rose as much as 34 cents to US$44.97 a barrel on the New York Mercantile Exchange and was at US$44.85 at 9:05 a.m. Sydney time.
Traders are also bracing for more volatility and possibly lower oil prices in coming weeks.
The outlook for oil markets outside the United States remained weak, however, as high production clashed with stalling demand, creating a market in which more oil is produced than needed.
Goldman Sachs revised its earlier estimation of oil prices based on new analysis that found a bigger glut of crude oil than they had expected.
According to AA Ireland, the average price of a litre of petrol on the forecourt last September (63 per cent of private cars are petrol despite the recent popularity of diesel) was €1.55.
Influential financial forecaster Goldman Sachs has released a new report stating that there is a glut of crude oil in the market that may bring prices down to as little as $20 a barrel in a worst-case scenario. The crude oil benchmark was trading $1.21 higher at $45.36 per barrel (/b) Thursday afternoon and narrowing its discount to Intercontinental Exchange (ICE) Brent to less than $3/b at one point.
Hedge funds added the most bullish oil bets since April on optimism that the global oversupply will disappear as producers slow output.
For the global surplus to end by the fourth quarter of 2016, US output will need to decline by 585,000 barrels a day, with other non-OPEC production falling by a further 220,000 barrels a day, Goldman said.
The global Energy Agency said that ongoing production cuts would lead to a rebalancing of the market by next year.
The IEA does not provide a forecast for oil prices.
The number of US oil rigs in operation fell in the latest week by 10 to 652, Baker Hughes (NYSE:BHI) said, marking a second straight drop after a brief rally that tracked a short-lived recovery in oil prices.