By Nicole Friedman And Cassie Werber
NEW YORK--U.S. oil prices dropped below $80 a barrel Monday
after a major U.S. bank slashed its price forecasts for the first
half of the coming year.
Goldman Sachs cut its oil forecasts for the first half of 2015
in a note released Monday. The bank's Brent forecast is now $85 a
barrel for the first two quarters of 2015, down from $100 a barrel
previously. Its forecast for the U.S. benchmark is now $75 for the
first half, down from $90 a barrel.
Light, sweet oil for December delivery recently fell $1.38, or
1.7%, to $79.63 a barrel on the New York Mercantile Exchange, the
lowest intraday price since June 2012. The U.S. benchmark price has
dipped below the psychologically important $80-a-barrel level in
intraday trading several times this month, but it has always
bounced back.
Brent recently traded down $1.31, or 1.5%, to $84.82 a barrel on
ICE Future Europe.
Oil prices have plummeted in recent months on concerns that a
continuation of abundant supplies are outweighing demand.
Market participants are watching the Organization of the
Petroleum Exporting Countries for signs of whether the
oil-producing cartel will collectively cut production to raise
prices. The group's next meeting is slated for Nov. 27. So far,
Saudi Arabia, the largest OPEC producer, has indicated that it is
comfortable with lower prices.
OPEC "will no longer act as the first-mover swing producer,"
Goldman said in its note. "Accelerating non-OPEC production growth
outside North America will outpace demand growth, leaving the oil
market oversupplied."
Other major banks have lowered their oil-price forecasts
recently, including Citigroup and Deutsche Bank.
Deutsche Bank cut its forecasts in a note released Friday to
2015 annual averages of $88.75 a barrel for Brent and $80.50 a
barrel for the U.S. benchmark.
"We view the supply-demand landscape as fundamentally weak
through the end of 2016," the bank said. "Our expectation of a
strengthening U.S. dollar...would also tend to indicate long-term
downward pressure on oil prices."
A stronger dollar makes oil, which is traded in dollars, more
expensive to buyers using foreign currencies.
November reformulated gasoline blendstock, or RBOB, recently
fell 3.28 cents, or 1.5%, to $2.1489 a gallon.
November diesel slid 2.84 cents, or 1.1%, to $2.4535 a
gallon.
Write to Nicole Friedman at nicole.friedman@wsj.com and Cassie
Werber at cassie.werber@wsj.com
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