Goldman Sachs: Oil could reach $20

Investment banking firm Goldman Sachs Group Inc. is predicting crude oil prices could reach as low as $20 per barrel soon.

In a Friday analyst note, Goldman said $20 a barrel oil is one of the possible scenarios for prices in 2016, due to an international supply glut that’s larger than previously thought.

{mosads}“The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016,” Goldman analysts including Damien Courvalin wrote, according to Bloomberg Business.

“We continue to view U.S. shale as the likely near-term source of supply adjustment.”

Goldman reduced its most-likely 2016 price forecast for the West Texas Intermediate crude benchmark to $45 a barrel in the Friday analysis, from $57. Brent crude, an international benchmark, is predicted to average $49.50 a barrel, down from $62.

Central to the forecast was that oil production outside of OPEC countries, which is dominated largely by the United States, will have to reduce its output.

“We now believe the market requires non-OPEC production to shift from our prior expectation of modest growth to large declines in 2016,” the firm wrote. “The uncertainty on how and where that adjustment will take place has increased.”