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[LONDON] The rally in oil will dissipate and prices will decline to US$39 a barrel in New York, Goldman Sachs Group Inc said, maintaining an earlier forecast.
Continued equity issuance by oil explorers in the past week will "exacerbate" a global oversupply as a necessary pull-back in US production is delayed, Jeff Currie, the bank's New York- based head of commodities research, said in an interview on Bloomberg Television. Oil's rebound over the past month was driven by demand from retail investors, Currie said.
"We think this thing is over-done," Mr Currie said of the recovery during an interview on "Surveillance" with Tom Keene. "Our target on oil is it can go all the way down to US$39 a barrel" for West Texas Intermediate, and US$42 for Brent.
US oil explorers have not yet cut the number of rigs in use sufficiently to halt the nation's production growth, the bank said in a report on Feb 16.
Goldman last month cut its six- and 12-month forecasts for Brent to US$43 and US$70 a barrel respectively, from US$85 and US$90, amid increasing inventories. It also reduced its projections for US benchmark West Texas Intermediate to US$39 a barrel and US$65, according to a Jan 11 report.