Goldman Sachs and OPEC: Oil prices could crater to around $20 per barrel in 2016

Malaysia Malaysian Oil Tanker BarrelAn idle oil exploration vessel (L) is shrouded by haze in the Johor River in Malaysia's southern state of Johor October 6, 2015.REUTERS/Edgar Su

The oversupply in the oil market is absolutely killing prices and it's only set to get worse in 2016.

Oil prices are over 50% lower than they were last year, but according to Goldman Sachs and an OPEC official, oil could crater to near $20 per barrel in 2016.

Venezuelan oil minister Eulogio del Pino said on Sunday that OPEC cannot allow an oil price war and must take action to stabilise the crude market soon. When asked how low oil prices could go in 2016 if OPEC doesn't change its policy, he said: "Mid-20s."

Meanwhile, Michele Della Vigna from Goldman Sachs told the Today programme on BBC's Radio 4 that oil could fall to as little as $20 per barrel. However, he added that there is only about a "15% probability that this might happen" and if oil was to fall to this level, it would only be temporary "shock to the system" before the market stabilised again.

Crude oil futures lost ground on Monday in early Asian trading, as the global supply surplus pressured prices, but a cut in the number of US oil rigs for an 11th week in the last 12 limited the falls.

Benchmark front-month Brent futures for January fell 16 cents or 0.36 percent at $44.50 a barrel as of 0011 GMT after it ended up 48 cents at $44.66 a barrel on Friday.

US. crude's West Texas Intermediate (WTI) January contract also shed 31 cents or 0.74 percent at $41.59 a barrel against its previous settlement at $41.90. US crude's December futures which expired on Friday ended 15 cents down at $40.39 after hitting a low of $38.99, the cheapest since Aug. 27.

Algeria's energy earnings are forecast to fall to $26.4 billion next year while foreign exchange reserves will dip to $121 billion after low oil prices cut into the OPEC nation's economy, Finance Minister Abderrahmane Benkhalfa said on Sunday.

Syria Syrian Oil RigAn oil rig sits on a hillside on November 14, 2015 near Derek, in Rojava, Syria.John Moore/Getty Images

U.S. crude were briefly supported on Friday as U.S. drillers removed 10 oil rigs in the week ended Nov. 20, the biggest weekly decline since late October, bringing the total rig count down to 564, oil services company Baker Hughes Inc said in its closely followed report.

Markets eyed on developing geopolitical tensions in the oil-producing Middle East as Jordan's King Abdullah, a U.S. ally, will hold talks in Moscow on Tuesday with Russian President Vladimir Putin on how to tackle "terror groups" led by Islamic State in Syria, an official source said.

Shares in major equity markets gained on Friday and the euro weakened against the dollar as investors anticipated actions by U.S. and European central banks next month.

A top Fed official said on Saturday that there is a "strong case" for raising interest rates when Federal Reserve policymakers meet next month, as long as U.S. economic data does not disappoint.

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