By Cassie Werber
Oil fell on both sides of the Atlantic Monday, still hovering
close to multi-year lows, as one major U.S. bank slashed its price
forecasts for the first half of the coming year.
Goldman Sachs Monday said it was changing its oil forecasts for
the first half of 2015, predicting a lower oil price in the
medium-term.
The bank's Brent forecast is now $85 a barrel for the first two
quarters of 2015, down from $100 a barrel previously. Its WTI crude
oil forecast is now $75 for the first half, down from $90 a
barrel.
They list several factors behind the change. "Accelerating
non-OPEC production growth outside North America will outpace
demand growth, leaving the oil market oversupplied," they said in a
note to clients.
The scale and sustainability of U.S. shale oil production is
making global oil cheaper, they added. Finally, they predicted that
the Organization of the Petroleum Exporting Countries, which has
hitherto held the balance of power in oil, being able to ramp up or
slow down production to alter prices, "will no longer act as the
first-mover swing producer."
Instead, U.S. shale oil output will be called upon to fill this
role, the bank predicted.
The low oil price has been a boon to the beleaguered global
economy, says David Hufton of brokerage PVM, acting "like a huge
dose of QE," or monetary stimulus, he said, "although it is a
transfer of spending power rather than a net global increase."
Mr. Hufton sees little relief, though, for oil prices.
"Pessimism about prices remains widespread with every analyst
cutting their price forecasts significantly through next year," he
said.
Brent crude oil for December delivery is down 76 cents at $85.36
a barrel on ICE Futures Europe. WTI crude for delivery in December
is down 28 cents at $80.73 a barrel on the New York Mercantile
Exchange.
Recently ICE gasoil for delivery in November was down $3.00 at
$732.50 a metric ton, while gasoline was down 164 points at $2.1260
a gallon.
Write to Cassie Werber at cassie.werber@wsj.com
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