Oil Falls as Goldman Cuts Outlook While Venezuela Seeks Recovery
Oil fell to the lowest level in more than 5 1/2 years as Goldman Sachs Group Inc. reduced its price forecasts andVenezuela called on OPEC producers to work together to spur a recovery.
Futures slid as much as 3.3 percent in London after a seventh weekly drop. Crude has to “stay lower for longer” if investment in shale is to be curtailed to re-balance the global market, according to Goldman analysts. Prices need to return to $100 a barrel for economic equilibrium, Venezuelan President Nicolas Maduro said in Iran during a tour of Middle Eastern members of the Organization of Petroleum Exporting Countries.
Oil slumped almost 50 percent last year, the most since the 2008 financial crisis, amid a supply glut estimated by Qatar at 2 million barrels a day. OPEC is battling a U.S. shale boom by resisting production cuts, signaling it’s prepared to let prices decline to a level that slows the fastest pace of American output in more than three decades.
“We are yet to see any material indications in fundamentals to support a rebound in crude prices,” Miswin Mahesh, an analyst at Barclays Plc in London, said in a report. The “surplus is expected to expand” going into the second quarter.
Brent for February settlement dropped as much as $1.66 to $48.45 a barrel on the London-based ICE Futures Europe exchange and was at $48.74 at 11:22 a.m. London time. The contract lost 85 cents to $50.11 on Jan. 9, the lowest close since April 2009. The European benchmark crude traded at a premium of as little as $1.38 to U.S. marker grade West Texas Intermediate, the least since Oct. 16.
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