High oil inventories & low prices are the key quotas in Goldman Sachs new forecasts for oil.
The bank announced new forecasts on WTI oil, reducing its six month prediction to $39 a barrel and its yearly forecast to $65, down from $75 and $80 respectively. At opening of trade oil saw the price dropping from 47.64 to 47.10.
According to Goldman Sachs, the prediction is to see oil drop even further. Bloomberg noted Goldman’s report as saying, “To keep all capital sidelined and curtail investment in shale until the market has re-balanced, we believe prices need to stay lower for longer. The search for a new equilibrium in oil markets continues.” Bloomberg continued, ‘West Texas Intermediate, the U.S. marker crude, will trade at $41 a barrel and global benchmark Brent at $42 in three months, the bank said. It had previously forecast WTI at $70 and Brent at $80 for the first quarter.
In the meantime, oil companies, many who are counting on their diversification to cushion the blow of the lowest oil prices in 5.5 years, are about to release their quarterly figures this month.
SHELL - Shell’s story is one of surprise for investors over 2014, giving better than expected earnings per share in each quarter. Shell also announced that a restructuring and job cutting scheme will see 3,000 jobs chopped at the Albian Sands mining project in northern Alberta. Shell’s earnings are due on 29 January 2015 and reports so far say that Shell is expected to see earnings drop by 15% in 2015, to 295.3 US cents per share.
ExxonMobil – The US giant saw its last high of 104.62 in July 2014, dropping to lows in December of 86.10 with Monday’s trading at the 92.03 mark. Fourth Quarter 2014 earnings will be issued on Monday, February 2, 2015, according to ExxonMobil’s website. Stock price fell almost 9% in 2014, whilst earnings for Q3 in October grew 3% opposed to the 7% for the first nine months on a year-on-year basis. As reported in ExxonMobil’s Q3 results, the company said, ‘Integration across Upstream, Downstream and Chemical gives us competitive advantages in scale, efficiency, technical and commercial capabilities, regardless of market fluctuations over the business cycle.’
Energy shares as a whole in the US have seen nearly a quarter of their value lost in the last six months as oil prices have dived and OPEC have refused to reduce production. But many feel that the 4% rise on the USA500 [S&P] has already factored in the price reduction of the energy shares.
MT4 chart: oil
MT4 chart: SHELL
MT4 chart: ExxonMobil
MT4 chart: USA500
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