Oil Falls to 28 Month Low After Goldman Cuts Price Forecast

West Texas Intermediate crude fell to the lowest in almost 28 months as Goldman Sachs Group Inc. joined other banks in lowering price forecasts amid concern supplies are outpacing demand. Brent slid for a second day.

WTI will trade at $75 a barrel in the first quarter, down from an earlier estimate of $90, Goldman analysts including Jeffrey Currie in New York said in a report yesterday. Banks including Barclays Plc, Bank of America Corp. and Citigroup Inc. have already reduced their estimates after both grades collapsed into a bear market amid rising global supplies.

“The near-term supply, demand situation is bearish,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $2.4 billion. “Prices will not recover until the last bear dies.”

West Texas Intermediate for December delivery declined $1.24, or 1.5 percent, to $79.77 a barrel at 9:21 a.m. on the New York Mercantile Exchange after touching $79.44, the lowest level since June 29, 2012. Volume was 18 percent below the 100-day average.

Brent for December settlement slid $1.25, or 1.5 percent, to $84.88 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was about 37 percent below the 100-day average for the time of day.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza