Oil ends down about 2 percent as Goldman Sachs cuts price forecast

Fri Sep 11, 2015 3:27pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - 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.

Goldman lowered its 2016 forecast for U.S. crude to $45 a barrel from $57 previously, and Brent to $49.50 from $62, citing oversupply and concerns over China's economy.

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 .SPX 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 CLc1 settled down $1.29, or 2.8 percent, at $44.63 a barrel.   Continued...

A customer prepares to fill up his tank in a gasoline station in Nice December 5, 2014. REUTERS/Eric Gaillard