13 September 2015, News Wires – Crude futures fell 2 percent or more on Friday after influential Wall Street trader Goldman Sachs cut its outlook on oil, but positive sentiment from rebounding U.S. stock prices and less drilling for oil helped the market pare losses.
Germany’s Commerzbank also cut its oil outlook, joining a long list of banks that have downgraded crude price projections on supply glut concerns. “The oil market is even more oversupplied than we had expected and we forecast this surplus to persist in 2016,”
Goldman said in a note entitled “Lower for even longer.” Citing “operational stress” as a growing downside risk, the Wall Street firm said crude could even fall to near $20 a barrel. “While not our base case, the potential for oil prices to fall to such levels … is becoming greater as storage continues to fill.”
Global benchmarks for crude oil fell more than 3 percent initially on the Goldman announcement, then pared losses as stocks on Wall Street rebounded and news of a lower U.S. oil rig count emerged.
But toward the close, they headed lower again before finishing off their lows. U.S. crude settled down $1.29, or 2.8 percent, at $44.63 a barrel. Brent, the global benchmark for oil, closed down 75 cents, or 1.5 percent, at $48.59. U.S. stocks were off their lows in afternoon trade ahead of a Federal Reserve meeting next week that could decide on an interest rate hike.
Equity markets have provided direction to oil since the end of August as investors grappled with mixed fundamentals for crude.