Goldman Sachs revised down its oil price forecast for 2015 with its projection for the price of Brent crude as low as $42 per barrel during the second half of 2015 in its report on Sunday.
Goldman forecasts Brent oil price to be the lowest of the year during the second quarter of 2015 with $42 per barrel, revised down from $80, the U.S. multinational investment banking firm said in its report.
The global benchmark Brent crude oil price was revised down to $50.38 from $83.75 per barrel for 2015's average and in addition, Brent oil price for the first quarter of 2015 was revised down to $47 from $85 per barrel, according to the report named 'The New Oil Order,' released on Jan. 11.
'We expect a sharp build in inventories to continue during the first half of 2015, which is why we see oil prices remaining low,' Goldman said in the report.
'As inventories continue to build into the summer of 2015, we believe oil prices are likely to remain below $50 per barrel,' the firm added.
For the third quarter of 2015, the price of the global benchmark was revised from $85 per barrel to $48. For the fourth quarter of 2015, the price was downgraded to $64 from $85 per barrel.
For 2016 and 2017, Brent oil prices were revised down to $70 from $90 per barrel.
Meanwhile, the American benchmark for crude oil prices, West Texas Intermediate, WTI, was revised down to $47.15 from $73.75 per barrel for 2015's average.
The lowest point for WTI is projected to come during the second quarter of 2015 at an average of $40.50, while the average prices of the American benchmark are expected to be $65 per barrel for 2016 and 2017.
- Oil production projections
Some of the main reasons for the steep decline in oil prices are the oversupply and low demand of oil in the markets, however the investment banking firm expects the U.S. output to grow in 2015, while global demand is projected to increase as well.
'We raise our U.S. production level in the first half of 2015, but higher capex cuts translate into a sharper slowdown in production,' said Goldman. 'We see downside risk by the year-end,' it added.
The investment bank projects less production growth from Brazil, Azerbaijan, Kazakhstan and Libya during the second half of 2015, as it expects production from Russia and Iraq to increase.
In addition, Goldman predicts that the Organization of the Petroleum Exporting Countries, OPEC, will wait until the second half of 2015 to make any decision on cutting production.
The oil cartel was expected to respond to the falling oil prices by making production cuts, but decided not to change its oil output on Nov. 27. The cartel still remains silent against the sharp decline in oil prices, and has not yet called an emergency meeting.
By Ovunc Kutlu
Anadolu Agency
ovunc.kutlu@aa.com.tr