Why Goldman thinks its $50 oil forecast could be wrong

Jessica Morris
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A worker inspect facilities on an upstre
The government and militants in Nigeria agreed a ceasefire (Source: Getty)

Most oil market pundits will tell you how hard it is to predict where the black stuff is heading.

And while Goldman Sachs is the most influential commodities bank, like pretty much every forecaster, it has been known to get things wrong.

Now it's said that crude could trade below its $50 forecast in the second half of 2016 due to higher-than-expected output from Organisation of Petroleum Exporting Countries (Opec) member Nigeria, Bloomberg reported.

But it depends on the success of a ceasefire between militants and the government there, according to a note by Goldman analysts.

Unforeseen events which are impossible to factor into market mavens' forecasts — such as the militant attacks on Nigerian pipelines or the wildfires which tore through Canada — have helped oil recover from its 13-year low in January.

"The path of future Nigerian production remains uncertain in the absence of a sustainable agreement ... the path to such a resolution may see further disruptions and should attacks resume and continue to target inland or shallow water fields connected to onshore terminals," the note said.

Fading hopes for supply disruptions helped send Brent crude, the global benchmark, down 1.82 per cent to $49.69 per barrel this afternoon. Its US counterpart, West Texas Intermediate crude, slumped 2.3 per cent to $48.73.