Goldman's Forecast | Russell T. Rudy Energy LLC
“World Oil” reports that investment banker, Goldman Sachs predicts a bull market for oil before year-end. Previously, the bank had been exceptionally bearish, predicting prices as low as $20 per barrel as a possibility in 2016. Goldman says that the $20 scenario is still possible, but only if oil storage capacity runs out. Since this is considered unlikely, their most probable case prediction is for $40 for the first half of this year.
Goldman’s logic is that dramatically reduced prices will result in domestic production cutbacks of 575,000 barrels of oil per day, and flip the market from a surplus to shortage by year-end. Currently, future prices are at a discount to current prices. As the discount disappears, Goldman sees this signaling a price increase and a bull market.
Historically, low prices have led to less supply and ultimately to price recovery. There is every reason to believe that this will be the case again, it’s just a matter of when.
To read the article in its entirety, please go to http://www.worldoil.com/news/2016/01/15/goldman-sachs-sees-oil-bull-market-being-born-in-crash .
