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Business/Finance See other Business/Finance Articles Title: Oil falls as glut pushes Goldman to cut price forecasts New York (AFP) - The oil market sank Friday as Goldman Sachs slashed its price forecasts for next year in the face of a larger glut than it originally expected. Related Stories Oil ends down about 2 percent as Goldman Sachs cuts price forecast Reuters Oil prices could sink to $20 a barrel, warns Goldman MarketWatch US shale drillers face squeeze from Saudi oil policy AFP Oil stages modest rebound after mixed US petroleum data AFP Oil prices leap 8% on lower US output, OPEC signal AFP Mighty Millions Lottery is here! Mighty Millions Home Lottery Sponsored US benchmark West Texas Intermediate (WTI) for October fell $1.29 to $44.63 a barrel on the New York Mercantile Exchange, after having added almost $2 on Thursday. Brent North Sea crude for delivery in October, the global benchmark for oil, closed at $48.14 a barrel in London, down 75 cents from Thursday's settlement. Since last Friday, both contracts have lost about three percent. "There's still a lot of indecision here. We've been back and forth, and we're trying to find a fair value," said Carl Larry at Frost & Sullivan. "For every report that comes out, every prediction that comes, we're still not out of this range, between $40 and $50." "Right now, what matters is supply, as the demand picture hasn't changed," he added. Goldman Sachs cut its 2016 price forecast for WTI to $45 a barrel, sharply lower than its May estimate of $57. "The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016 on further OPEC production growth, resilient non-OPEC supply and slowing demand growth, with risks skewed to even weaker demand given China's slowdown," it said. In the worst case, the US bank projected the price of oil could tumble to near $20 a barrel if the glut breaches logistical and storage capacity. On the other hand, the International Energy Agency forecast that oil supplies outside OPEC would fall by half a million barrels per day next year, with US shale producers accounting for four-fifths of the decline. Supporting that view, the Baker Hughes US oil rig continued its downward trend Friday. The rig count, a closely watched gauge of drilling activity, fell by 10 to 652, down 59 percent from a year ago. Poster Comment: John If they think it is over supplied now, wait until the sanctions are lifted on Iran. How much oil have they been sitting on for the last 30+ years. Yes, $20 a barrel is entirely possible. $2.00 a gallon is not. Taxes and fees will be added to make up the difference. They are not getting jack from the real estate market anymore and income tax is at an all time low, so they have to make up the money somewhere 13-6 John @Stephen. I paid the lowest I have in years here in Northern CA this morning at $2.52/gal @Wes. If you pay attention you can make money on oil futures pretty easy these days. I had bought in @ $35/bar and sold at $98. Bought in again several weeks ago at $40 and sold this week at $46. I will buy back in again at mid 30s and sell at mid 40s. If this keeps going for 3-4 more years I will be able to retire in 3 more years instead of 9 when I reach 65 -1 Mike ...... I've read a number of annual reports from US upstream oil companies, and I have concluded that we are probably the low cost producer, whether from shale, sandstone, or carbonate formations. I think this is just unfair trade by the OPEC oligopoly slamming the price of oil up and down, possibly in cahoots with Goldman, Morgan, and Stanley: Wall Street, fat-cat, banksters.4-3 Wes... Mikey, you need more authoritative sources. It costs about $4-6/barrel to produce Saudi oil from shallow sand deposits. It costs American producers about $35-40/barrel to produce oil from deep shale deposits. Whoever told you that we are the lowest cost producer is full of shitola! 1-1 Mike ... Most Saudi production is from carbonates, costing much more than $6/barrel to produce. Last year's annual report from US shale oil producer Whiting reports $10 - 12 per barrel production costs, and they are still working on reducing production costs. I'm a petroleum geologist, so I know how to understand the published data. JERRIE D... Regardless of the oil industry (of which the Koch brothers is a major player in), lower gas prices ARE good for the economy. Individuals and families travel more during holidays and vacations and have more money to spend in eating establishments, at tourist attractions, hotels, and local stores/discount stores/specialty shops, grocers, and on local attractions at their destination. They stay longer, as well. Consumers have more money to spend at home when they pay less for gasoline, which means higher profits for stores and more sales tax in most state coffers (KS is not one of them). The KS state fair, this year, will most likely have a much larger turnout with lower gas prices, as will other state fairs and amusement parks. More fans will go to see professional and college games in their home state and other states. My son and two of his friends, for instance are already making plans to drive to MN in October to see the KC chiefs play Minnesota and with the lower gasoline prices they are saving enough money to buy a lot more expensive tickets for better seats. Yes, I do know that some oil field workers are getting laid off and oil executives making 6 and 7 figure salaries are going on unemployment for the first time, but so did millions of other Americans during the economic crisis with many of those only being able to find lower paying executive jobs, part time jobs, or jobs in another field.3-2 jim... The only problem with this line of argument is that in reality low energy price is hitting the consumer in the pocket book in a big way. Big chunk of dividend is coming from energy stacks. Consumers are saving a few dollars at the gas pump but losing thousands in their retirement savings and 401k. Consumer sentiment for September was just released and shows a big drop. eachcombr... So, how much did GS short oil futures before releasing this forecast? 23-1 Robbie Hat ... Exactly! Anything GS says or does is intended to manipulate the markets in their favor. I would guess this statement will make them billions today and into the coming months/years on already held positions Anyone remember the housing crisis?!? 3-1 Thinker ... It was reported in the news a while back that it costs OPEC about $6 to produce a barrel. Anything above that is profit.5-2 MM101... The cost to pull out of the ground is not OPEC's cost. Their costs include their national budgets, as most of it is funded by the sale of oil. There are 13 OPEC members. Saudi Arabia is the largest producer, and 90% of its budget comes from oil. Venezuela (6th) derives 96% of its budget from Oil. Iran (2nd) relies on oil for ~40% of its budget. Iraq (3rd) - 95%, Kuwait (4th) - 95%, UAE (5th) - 77%. Could Saudi Arabia be 'profitable' at $7 a barrel? Yes, but their National budget would be $10mil. Only 2 OPEC countries had higher Oil production in 2014 than 2012 - Iraq and UAE. Russia (not in OPEC) relies on oil for 52% of its budget. The economies of Russia and Iran are in shambles because of sanctions and oil prices, and they are the 2 most resilient oil producing countries outside of the US. 1 Not a chance at $20, unless we have a global depression. It probably won't even go down to $30. And with the major oil companies having to cut back on exploration due to low oil prices, get ready for a huge price spike in about 3 years. In 5 years, oil could be selling for $160 a barrel. Wes ... Put your money where your mouth is - invest every penny you have based upon your predictions! A few months ago people like you said that oil would never again be below $70/barrel, and today it is barely over half that. Lower prices actually result in increased production because economies of countries dependent upon oil revenues and corporations having great debt obligations have to produce even more oil to sell at declining prices to maintain buoyancy in a turbulent market.1-1 David ... The US is adding 1000 MW of Solar energy every month. This is from a report just released. Coal consumption at power plants have reduced by 40%. Similarly oil consumption would also see a sustained down curve in demand. The future of the oil industry is that of a shrinking demand as clean energy, new energy storage products come online, energy efficient cars, engines and appliances, electric vehicles, hydrogen hybrid cars from Japan are entering the market. The oil companies should read the writing on the wall, instead of waiting for something to happen and then holding the governments for bail outs with the usual " too big to fail " posture. 5-3 jim ... If you trust GS you also trust the predictions few year ago that oil is heading to $150. These people are trying to squeeze the last drop out of their short positions before turning around and becoming bullish again. Poor retail traders who are fooled by these so called analists. 3 Chiang Mai ... The Demwits here in Mexifornia will use the lower prices as an excuse to raise taxes, we're already paying $1.50/Gal. more than neighbor Arizona, Liberals never let a crisis, good or bad go to waste.1-1 Jim OPEC pushed it to $10 / barrel in early 90's wrecking oil industry with 400,000 workers let go in process....huge oil services companies in FT Worth went belly up Gearheart Industries, Pengo Industries were the biggest that went bust....know that since I bought a half million truck of Pengo's for 10 cent on the dollar.....huge auction with huge losses.....ugh...so yes $20 is reasonable price.1 Amvet...Talking down the oil price continues. The is no global oil glut, just a US economic war on Iran, Russia, Venezuela, and Brazil eisenhower... as i have declared many years to my friends in the oil industry , government should freeze pump prices @ $ 1.99 and let all the producers / brokers / bankers fight among themselves ..3-3 . http://news.yahoo.com/oil-lower-goldman-says-20-barrel-possible-004450209.html Post Comment Private Reply Ignore Thread
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