Oil extends losses over weak price outlook

SINGAPORE: Oil moved lower in Asian trade Tuesday after Goldman Sachs slashed its price forecasts for the next two years owing to a global supply glut.

US benchmark West Texas Intermediate (WTI) for December delivery fell 46 cents to $80.54 while Brent crude for December eased 59 cents to $85.24 in mid-morning trade.

“We continue to see oil prices drift lower, and with nothing significant happening, the Goldman report is still on investors´ minds,” David Lennox, resource analyst at Fat Prophets in Sydney, told AFP.

Goldman on Monday said it expects WTI to sink to $70 a barrel by the second quarter of next year before rising back to $80 in 2016. That was $15 a barrel lower than its previous forecast.

The Wall Street giant´s outlook on Brent is for it to fall to as low as $80 by the second quarter, staying weak through 2015 before returning to $90 level in 2016.

It pointed to the impact of strong US shale oil output as well as the inability of the OPEC oil cartel to act as a swing producer that can tighten global supplies and prices.

Given the rising glut on the global market, “US production growth needs to slow”, Goldman said in a client note.

Lennox said investors will be monitoring the latest US stockpiles report due on Wednesday.

The US Department of Energy (DoE) last week reported a 7.1 million barrel surge in crude reserves in the week to October 17.

The surge, more than double market expectations, added to worries about a global oversupply, further dampening prices.

“Further increases in US stockpiles will reinforce the weak price forecast by Goldman and others,” Lennox said.