Goldman Sachs sees oil at $30 a barrel in early 2009
12 Dec 2008
Crude oil prices could fall as low as $30 a barrel in 2009 as the economic downturn deepens, Goldman Sachs, Wall Street's largest oil trader, said in a report prepared for clients.
The Goldman report cut 2009 outlook for oil prices to $45 a barrel from $80 a barrel and also raised the possibility of crude falling below $40 a barrel.
''The collapse in world oil demand in the fourth quarter of 2008 as the global credit crunch intensified now threatens to push oil prices below $40 a barrel in the near term,'' said Goldman's commodities research team.
The investment bank said while oil prices will recover to about $42 by June and to $65 by December, the low prices of early 2009 will leave the annual average at $45.
Goldman lowered the three-month West Texas Intermediate crude target to $30 a barrel. The sweet light crude fell $3.30 to $44.68 a barrel in electronic trading on the New York Mercantile Exchange.
Another investment bank Merrill Lynch last week cut its forecast for oil prices in 2009 to $50 a barrel and warned prices could drop to a low as $25 a barrel if the recession spreads.
However, oil producing countries are expected to cut back output if prices continue the downward spiral. The Organisation of Oil Producing Countries (OPEC) is expected to take a decision on output curbs when they meet on 17 December.
While several OPEC ministers have hinted cuts from 1-1.5 million barrels per day, Goldman Sachs said it will take an additional 2 million bpd OPEC cutbacks along with another 600,000 bpd fall in non-OPEC output to ''rebalance the oil market''.
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