REUTERS
Prices may drop to $20 a barrel, most likely when refineries shut in October or March for maintenance, Jeffrey Currie, head of commodities research at the bank, said in an interview with Bloomberg, while Goldman’s long-term forecast for crude is at $50 a barrel, he said.
“When we think of the longer term oil price, yes we put it at $50 a barrel,” the expert said, according to Bloomberg.
“However the risks are to the downside given what’s happening in the other commodity markets and the macro markets more broadly,” he said
Currie believes there is a less than 50% probability the price will drop to $20.
The U.S. Federal Reserve may “leave a lot of negative uncertainty in emerging markets,” potentially affecting oil demand, if it doesn’t raise rates at its meeting this week, Currie said.
Read alsoRussia admits doomsday scenario of $20 per barrelLower iron ore, copper and steel prices as well as weaker currencies in commodity-producing countries have reduced costs for oil companies, according to Currie. The world is shifting from an “investment phase” of a 30-year commodity cycle to an “exploitation phase,” with shale fields as an important source of output, he said.
Read alsoIraq targets record Basra oil exports in OctoberEarlier this month, Goldman Sachs lowered its forecast for oil prices, noting that the surplus on the world market was higher than previously thought. The bank also said that if production is not cut in the near future, prices are likely to fall to $20 per barrel, which will help getting rid of excess oil.