Goldman Slashes Oil Forecasts as New Supply Seen Plentiful - Bloomberg

Goldman Slashes Oil Forecasts as New Supply Seen Plentiful - Bloomberg:

Goldman Sachs Group Inc. cut its oil price forecasts for 2019, citing a re-emerging surplus and resilient U.S. shale production.

Global benchmark Brent crude will average $62.50 a barrel this year, analysts including Damien Courvalin said in a Jan. 6 note, down from a previous estimate of $70. U.S. marker West Texas Intermediate will average $55.50 a barrel, down from a prior forecast of $64.50. Societe Generale SA also lowered 2019 price outlooks by $9 a barrel in a Jan. 7 note, with Brent now seen averaging $64.25 for the year and WTI $57.25.

A surge in OPEC production in late 2018 means the market started this year better supplied than the last, and pipeline constraints in the U.S. Permian Basin will clear up faster than expected, according to Goldman. Big projects in the works for years in Brazil and Canada will also ramp up output in 2019. Combined, those increases mean fewer high-cost marginal barrels will be needed to meet global demand growth this year, Courvalin said.