Oil slips below US$80 then recovers
The price of oil dipped below US$80 a barrel Monday, after a major investment bank lowered its forecast for crude prices this year and next.
Goldman Sachs analysts now expect US oil prices to be roughly US$75 a barrel in 2015, down from their previous forecast of US$90 a barrel. Goldman also sees Brent crude, a benchmark used to price international oils used by many US refineries, to be around US$85 a barrel.
Rising oil production, particularly in the US - and the concerns about weaker economic growth internationally - has soured investors on the prospect for crude oil and the companies that produce it.
Goldman Sachs is the latest Wall Street bank to lower its forecast for crude prices, saying that OPEC was unlikely to reduce exports in an effort to lift prices and that US production continues to expand. The bank sees oil stabilising at US$80 a barrel until at least 2017.
Energy stocks were hit hard following Goldman's report, particularly the energy exploration and services companies. Halliburton, Nabors Industries, Newfield Exploration and Schlumberger were all down 4.0 per cent or more. The S&P 500 energy sector was down 2.5 per cent Monday, far more than the 0.2 per cent decline in the overall market.
Benchmark US crude was down 37 cents to US$80.65 a barrel Monday afternoon after falling as low as US$79.44. Brent crude was down 30 cents to US$85.13. It eventually closed down one cent at US$81.