Goldman Sachs warns oil price has to fall further to rein in shale gas boomComments Off on Goldman Sachs warns oil price has to fall further to rein in shale gas boom
Brent crude hit $48.55 at one point, the lowest since April 2009, amid a global supply glut as oil cartel Opec keeps up production levels to put pressure on shale producers.
UK inflation will fall to a 12-year low of 0.7% tomorrow as a result while one petrol station cut pump prices to below £1 a litre today.
Goldman believes Brent crude will trade at just $42 a barrel over the next three months, virtually half its previous forecast of $80.
The industry can soak up the extra production due to a big rise in storage capacity, the bank said. “To keep all capital sidelined and curtail investment in shale until the market has rebalanced, we believe prices need to stay lower for longer,” it added.