Don’t count on a big rally in crude oil, said Jeff Currie, the head of commodities research at Goldman Sachs Group. Or any rally, for that matter.
Two years into an oil rout in which West Texas Intermediate oil fell to about US$26 a barrel in February, the risk is “to the downside” because there are not any clear catalysts to push up prices, Mr Currie said. For the next 12 months, he said, oil is likely to trade in the $45-$50 range.
In May, Goldman cut its 2017 forecast for oil prices to $53 a barrel from $58 as producers became more efficient and Saudi Arabia, Russia and Iran boosted output more than expected. A “modest” supply deficit in the market is forecast to turn to a surplus early next year, Mr Currie.
“It really looks similar to the period of the early 1990s, when we were at $20 oil,” he said. “Is $45 to $50 the new $20? I am not ready to say we are in this new equilibrium environment, but it sure does feel like we’re moving in that direction.”
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