U.S. frackers feel the pinch of low oil prices
Forget $40 a barrel oil. Prices could plummet to $20 as a massive supply glut persists until the end of next year.
That's the view of Goldman Sachs, which published an oil report Friday headlined "Lower for even longer."
The bank's commodities team slashed its forecast for average prices in 2016 to $45 per barrel from $57, but said the risks of a collapse to $20 were growing.
Here's why.
1. OPEC will pump even more oil in 2016, led by increases in Saudi Arabia, Iraq and Iran. Goldman Sachs believes the cartel's resolve to defend its market share has been strengthened in recent weeks.
"Despite the fiscal challenge that low oil prices create for OPEC producers, the alternative of reducing production would similarly undermine long-term revenues," it noted.
Prices will have to fall much further for OPEC to consider cutting production.
U.S. frackers feel the pinch of low oil pricesForget $40 a barrel oil. Prices could plummet to $20 as a massive supply glut persists until the end of next year.That's the view of Goldman Sachs, which published an oil report Friday headlined "Lower for even longer."The bank's commodities team slashed its forecast for average prices in 2016 to $45 per barrel from $57, but said the risks of a collapse to $20 were growing.Here's why.1. OPEC will pump even more oil in 2016, led by increases in Saudi Arabia, Iraq and Iran. Goldman Sachs believes the cartel's resolve to defend its market share has been strengthened in recent weeks."Despite the fiscal challenge that low oil prices create for OPEC producers, the alternative of reducing production would similarly undermine long-term revenues," it noted.Prices will have to fall much further for OPEC to consider cutting production.
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