Goldman Sachs sees the price floor for Brent crude oil at $90 per barrel in the mid-term as the global benchmark dropped to its lowest since June 2012 this week. In two reports published this week, the investment bank maintained its 12-month forecast for Brent at $100 a barrel, but said "risks to our forecast are skewed to the downside should demand growth remain lackluster."
The new Brent price floor is based on $95 per barrel average break even price to balance Opec budgets, the bank said. Stronger shale oil output from the United States, easing production disruptions in Libya, Iran and Nigeria further compounded pressure on oil prices, they said.
"Although our conviction in the $100 a barrel forecast is waning, particularly given the lack of tangible signs of a sequential acceleration in global growth, we have not lost enough conviction to change our forecasts." Brent futures slipped on Friday towards $93 a barrel, extending a three-day slide that has pushed prices to their lowest since 2012, having fallen more than 15 percent this year. Quoting its options analyst John Marshall, Goldman said investors "appear to be looking through the recent drop in the oil price as almost half is driven by dollar strength."