Crude oil just broke $US80.
In morning trade on Monday, the price of crude oil fell below $US80 a barrel for the first time since mid-2012 as energy prices continue to plummet around the world.
The most recent drop in oil, which has been a bear market since topping out at about $US107 during the summer, follows a cut in oil-price expectations from Goldman Sachs’ Jeff Currie over the weekend.
Currie took his oil-price forecasts for WTI Crude to $US75 a barrel in the first quarter of 2015 and to $US70 a barrel in the second quarter of next year.
Longer-term, Currie expects WTI prices to stabilise near $US80 a barrel, and Currie said that “uncertainty around the required price to slow down US shale production growth is a key risk to our forecast.”
Currie’s forecast relies on three key reasons:
- We have greater confidence in the scale and sustainability of US shale oil production. This implies that the global cost curve has shifted lower and that cost deflation is sustainable.
- We forecast that accelerating non-OPEC production growth outside North America will outpace demand growth, leaving the global oil market oversupplied.
- We believe that OPEC will no longer act as the first-mover swing producer and that US shale oil output will be called upon to fill this role.
Here’s the ugly chart of oil futures on Monday morning.
Business Insider Emails & Alerts
Site highlights each day to your inbox.