Goldman cuts oil price forecasts on oversupply, China slowdown

[LONDON] Goldman Sachs said it expects oil prices to tumble further this year on rising Opec production and recovering non-Opec supply, which is expected to outstrip demand.

"Oil prices have declined sharply over the past month to our US$45 per barrel WTI Fall forecast. While this decline was precipitated by macro concerns, it was warranted in our view by weak fundamentals," a report from the influential Wall Street firm said.

The bank cited rising Opec production and economic concerns associated with China as the main reasons that triggered the downward revision in price forecasts.

The bank said the oil market was more oversupplied than it had expected and that it forecasts the surplus to persist in 2016.

The US investment bank cut its 2016 WTI forecast to US$45 a barrel from US$57 and expects a 2015 WTI average price of US$48.1 per barrel. Its prior forecast was US$52.

Goldman also trimmed its average 2015 Brent price forecast to US$53.7 per barrel from US$58.2 and its 2016 forecast to US$49.5 a barrel from $62.

More than 10 major international financial institutions have cut their oil price forecasts over the last month citing weak market fundamentals and the recent slowdown in the Chinese economy.

Crude oil prices fell on Friday as a stronger dollar, Saudi Arabia's dismissal of a producer summit and a lower price forecast by Goldman Sachs weighed, with prices headed for a weekly loss despite rallying in the previous session.

REUTERS