SEOUL (Reuters) – Crude oil prices fell on Friday as a stronger dollar, Saudi Arabia’s dismissal of a producer summit and a lower price forecast by Goldman Sachs weighed, with prices headed for a weekly loss despite rallying in the previous session.
October Brent, the global oil benchmark, decreased 51 cents to $48.38 a barrel as of 0659 GMT after it settled up $1.31, or 2.8 percent, at $48.89 on Thursday.
October U.S. crude futures lost 65 cents to $45.27 a barrel after it settled up $1.77, or 4 percent, at $45.92 a barrel.
Saudi Arabia believes a summit of heads of states of oil producing countries would fail to produce concrete action toward defending oil prices, sources familiar with the matter said on Thursday.
The comments followed a meeting of Gulf Arab oil ministers with Qatar’s emir in Doha, at which a Venezuelan proposal for an OPEC and non-OPEC summit was discussed.
The U.S. dollar edged higher in Asian trading on increased chances of more easing in Japan. A firmer U.S. dollar makes oil more expensive for holders of others currencies.
Goldman Sachs forecast on Friday 2015 WTI prices at $48.10 per barrel from an earlier estimate of $52 per barrel. It also lowered the 2016 WTI price forecast to $45 per barrel from $57 per barrel earlier.
Goldman also predicted 2015 Brent prices at $53.70 per barrel from $58.20 per barrel earlier, while it saw 2016 Brent prices at $49.50 per barrel from $62 per barrel earlier.
Oil prices rallied on Thursday after U.S. Energy Information Administration (EIA) data showed demand for gasoline over the latest four-week period rose almost 4 percent from a year ago.
Crude inventories were up 2.6 million barrels to 458 million barrels in the past week, compared with analysts’ expectations for an increase of 933,000 barrels.
Yet crude stocks at the Cushing, Oklahoma, delivery hub fell by 897,000 barrels to 56.41 million barrels, EIA said.
“Crude oil stocks appear to be stabilizing as refinery demand continues to fall, not surprisingly as refining margins have considerably weakened,” BNP Paribas said in a note.
Russia’s energy minister expects cuts in global shale oil production to help stabilize the oil market. Alexander Novak also reaffirmed that Russia, one of the world’s top oil producers, would not cut its own production.
Asian shares edged higher on Friday following gains on Wall Street while the dollar steadied, but gains were capped by uncertainty over whether the U.S. Federal Reserve will raise interest rates next week.
The global surplus of oil is even bigger than Goldman Sachs Group Inc. thought and that could drive prices as low as $20 a barrel.
While it’s not the base-case scenario, a failure to reduce production fast enough may require prices near that level to clear the oversupply, Goldman said in a report e-mailed Friday. The bank cut its forecast for Brent and WTI crude through 2016 on the expectation that the glut will persist on OPEC production growth, resilient supply from outside the group and slowing demand expansion.
“The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016,” Goldman analysts including Damien Courvalin wrote in the report. “We continue to view U.S. shale as the likely near-term source of supply adjustment.”
Goldman trimmed its 2016 estimate for West Texas Intermediate to $45 a barrel from a May projection of $57. The bank also reduced its 2016 Brent crude prediction to $49.50 a barrel from $62.
WTI for October delivery fell as much as $1.16, or 2.5 percent, to $44.76 a barrel on the New York Mercantile Exchange and is heading for a weekly decline. Prices are down 16 percent this year. Brent for October settlement is 3.6 percent lower this week.
Global Glut
Oil in New York has slumped more than 25 percent from its June closing peak amid signs the glut will persist. Leading members of the Organization of Petroleum Exporting Countries are sustaining output, while Iran seeks to boost supply once international sanctions are lifted. U.S. stockpiles remain about 100 million barrels above the five-year seasonal average.
“We now believe the market requires non-OPEC production to shift from our prior expectation of modest growth to large declines in 2016,” Goldman said. “The uncertainty on how and where that adjustment will take place has increased.”
U.S. Output
The U.S. pumped 9.14 million barrels a day of oil last week, almost 3 million barrels above the five-year seasonal average, according to data from the Energy Information Administration. While the EIA this week cut its 2015 output forecast for the nation by 1.5 percent to 9.22 million barrels a day, production this year is still projected to be the highest since 1972.
U.S. output will need to decline by 585,000 barrels a day next year and other non-OPEC production will need to fall by 220,000 barrels a day for the global surplus to end by the fourth quarter of 2016, Goldman said. Saudi Arabia, Iraq and Iran will drive supply growth from OPEC, the bank said.
Shale oil production in the U.S. will drop 9 percent next year as a crude price below $50 a barrel “slams brakes” on years of growth, the International Energy Agency said in its monthly market report Friday. Output is forecast to fall by 385,000 barrels a day next year to 3.9 million barrels a day. Total non-OPEC supply will drop by 500,000 barrels a day next year, according to the IEA.
OPEC, the supplier of 40 percent of the world’s crude, has produced above its 30-million-barrel-a-day quota for the past 15 months. Iranian Oil Minister Bijan Namdar Zanganeh has vowed to increase output by 1 million barrels a day once sanctions are removed as the nation seeks to regain market share.
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