Goldman Sachs warns oil price will fall again

Caitlin Morrison
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OIL PRICES could fall again, reversing the rebound rally the commodity has experienced in recent weeks, Goldman Sachs has warned.

According to analysts at the bank, the fact that the pricing rally is so premature has kept it “expecting that prices will remain below the current forward curve in 2015”.

“While we reiterate our out-of-consensus view that demand growth will be strong in 2015, on the back of better economic growth and low oil prices, we did not expect demand to be so strong this soon,” the analysts said.

Weather was also blamed for playing “a great part in keeping crude off the market”, through a combination of sandstorms in Iraq disrupting exports, and cold weather in the US and drought in Brazil supporting demand.

Analysts say that there is a likelihood that oil prices will remain at $40 a barrel for two quarters, if the expected decline is not disrupted by decisions from the Organisation of Petroleum Exporting Countries.

They also said low prices are needed so the capex and rig cuts seen in recent weeks materialise into lower production growth, which will aid long-term price strengthening.

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