Saudi- Oil price slumps 5 percent after Goldman slashes forecast
(MENAFN- Arab News) NEW YORK: Oil slumped 5 percent to near six-year lows accelerating its months-long rout after Goldman Sachs slashed its short-term price forecasts and Gulf producers showed no signs of curbing output.
Brent was down $2.34 to $47.78 a barrel by 11:47 a.m. EST (1637 GMT) after dropping as low as $47.18 to its lowest since April 2009.
US crude oil was down $1.98 at $46.38 after earlier hitting a low of $45.90 also near six-year low.
Analysts at Goldman Sachs cut their three-month forecasts for Brent to $42 a barrel from $80 and for the US West Texas Intermediate contract to $41 from $70 a barrel. The bank cut its 2015 Brent forecast to $50.40 a barrel from $83.75 and US crude to $47.15 a barrel from $73.75.
Despite declining investments in US shale oil the main driver in the current supply glut production will take longer to come down Goldman said in a report.
Tariq Zahir of Tyche Capital Advisers said a bottom was hard to predict as prices varied so quickly.
'I figured we'd see $40 in the near term but everything seems to be happening quicker than expected' Zahir said.
'You're going to get some more margin call selling in here there will be a bounceback that will be sharp and violent.'
Walter Zimmerman of United-ICAP said the market's sharp changes in the last few months make it impossible to predict an average price for the year.
'In today's markets that are so widely volatile an average price is completely useless' Zimmerman said.
'There's a million barrels a day of excess production' he said. 'That is what is driving the price.'
As OPEC's November decision not to curtail production in the face of falling prices piles pressure on some group members Venezuelan President Nicolas Maduro met Saudi officials in Riyadhas part of a diplomatic tour in the Gulf to discuss falling oil prices.
However Saudi Arabia has said it will not support prices by cutting production and ignored calls from smaller OPEC members including Venezuela to react to falling oil prices at the cartel's November meeting.
On Saturday Iran vowed to help Venezuela stem the oil price fall.
Brent was down $2.34 to $47.78 a barrel by 11:47 a.m. EST (1637 GMT) after dropping as low as $47.18 to its lowest since April 2009.
US crude oil was down $1.98 at $46.38 after earlier hitting a low of $45.90 also near six-year low.
Analysts at Goldman Sachs cut their three-month forecasts for Brent to $42 a barrel from $80 and for the US West Texas Intermediate contract to $41 from $70 a barrel. The bank cut its 2015 Brent forecast to $50.40 a barrel from $83.75 and US crude to $47.15 a barrel from $73.75.
Despite declining investments in US shale oil the main driver in the current supply glut production will take longer to come down Goldman said in a report.
Tariq Zahir of Tyche Capital Advisers said a bottom was hard to predict as prices varied so quickly.
'I figured we'd see $40 in the near term but everything seems to be happening quicker than expected' Zahir said.
'You're going to get some more margin call selling in here there will be a bounceback that will be sharp and violent.'
Walter Zimmerman of United-ICAP said the market's sharp changes in the last few months make it impossible to predict an average price for the year.
'In today's markets that are so widely volatile an average price is completely useless' Zimmerman said.
'There's a million barrels a day of excess production' he said. 'That is what is driving the price.'
As OPEC's November decision not to curtail production in the face of falling prices piles pressure on some group members Venezuelan President Nicolas Maduro met Saudi officials in Riyadhas part of a diplomatic tour in the Gulf to discuss falling oil prices.
However Saudi Arabia has said it will not support prices by cutting production and ignored calls from smaller OPEC members including Venezuela to react to falling oil prices at the cartel's November meeting.
On Saturday Iran vowed to help Venezuela stem the oil price fall.
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