* Goldman says brings forward medium-term bearish outlook
* Sees Q1 2015 WTI crude at $75/bbl vs $90/bbl previously
* Sees Q1 2015 Brent at $85/bbl vs $100/bbl previously
* Non-OPEC production growth outside U.S. to top demand
* Says U.S. shale oil driving down the global cost curve
(Adds background on Goldman's past oil price calls, link to
factbox, updates futures price move)
By Aaron Sheldrick
Oct 27 Goldman Sachs has slashed its 2015 oil
price forecasts, making it the most bearish among major
financial institutions, adding pressure on Monday to crude
futures that have already tanked near 25 percent over the past
The U.S. investment bank said rising production will
outstrip demand, joining other oil analysts who predict
consumption will be dented by slower global economic growth and
lead to a supply glut.
Goldman analysts said in a report released late on Sunday
that they expect U.S. benchmark West Texas Intermediate
(WTI)crude to fall to $75 a barrel and Brent to $85 a
barrel in the first quarter of 2015, both down $15 from their
WTI could fall as low as $70 in the second quarter and Brent
as low as $80, when oversupply would be the most pronounced,
before returning to first-quarter levels, Goldman said.
Goldman is known for its bold oil price calls, some
accurate, some not. In May 2011, with Brent oil prices around
$115, Goldman said that oil could rise to $130 within a year,
and they very nearly did for a brief period in March 2012.
In 2008, with oil prices on the rise above $100, Goldman
said prices could spike as high as $200. Oil did reach near $150
that July, but within months had begun a relentless credit
crisis-driven dive to below $40 by the end of the year.
Goldman's latest projections contrast with those of Standard
Chartered Bank's oil analyst Paul Horsnell, known for having
called the market's long rally a decade ago. He is sticking with
a more bullish bias.
Last week, Horsnell and his team cut their first quarter
Brent forecast to $98 but pared back their forecast for calendar
2015 by just $5, to $105 a barrel.
Brent crude futures dipped nearly 1 percent on
Monday to less than $86 a barrel, extending their decline
despite a continued easing of worries over the global economic
recovery, said Tomomichi Akuta, senior economist at Mitsubishi
UFJ Research & Consulting.
"I personally think prices have room for declines though not
as steep as Goldman," Akuta said.
NYMEX crude for December delivery fell below $80 on
Monday to its lowest in 28-months.
If WTI falls to $70 a barrel next year, as Goldman Sachs is
forecasting, it would be the U.S. benchmark's lowest level since
Goldman said production outside OPEC countries was expected
to accelerate, led by Brazil and drilling in the Gulf of Mexico
with the end of extensive deep-water maintenance following the
2010 Macondo disaster.
Non OPEC-production outside the U.S. lower 48 states is
forecast to increase by 412,000 barrels per day this year,
573,000 bpd in 2015 and 505,000 bpd in 2016.
Output from Brazil's Santos basin is forecast to start to
pick up, increasing Brazilian output by 206,000 bpd in 2014 and
325,000 bpd next year. Gulf of Mexico production is expected to
increase by 155,000 bpd in 2015.
Among OPEC countries, Iraqi production is seen increasing by
200,000 bpd and Libya's output stabilising at about 700,000 bpd,
compared with recent production of about 900,000 bpd.
Iranian production and exports are unlikely to see further
growth because Goldman analysts do not expect a resolution to
the country's nuclear dispute with the West by the Nov. 24
deadline, meaning sanctions on Tehran will not be lifted.
On the demand side, growth has only averaged 630,000 bpd
year-on-year so far, less than half Goldman's initial forecast
for 2014, the report said.
Global economic growth is forecast by Goldman analysts to
increase to 3.5 percent next year but there is a "risk that the
historical relationship between global GDP growth and oil demand
has weakened," the report said.
In the United States, rising shale production is
increasingly affecting global energy flows and eroding OPEC's
pricing power, Goldman said.
Anthony Jude, a senior adviser on energy and sustainable
development matters for the Asian Development Bank, cited
falling U.S. oil imports as the primary reason for lower global
The United States is "producing an additional 3 million
barrels per day because of shale oil", he said on Monday on the
sidelines of Singapore International Energy Week.
U.S. crude oil imports have fallen to 7.0 million-7.6
million bpd from peaks above 10 million bpd in 2005 and 2006
since the advent of the shale oil and gas boom, according to
data posted on the website of the U.S. Energy Information
"U.S. shale is the marginal swing barrel in the new order,"
Goldman said, adding that a slowdown in production will happen
when WTI falls to $75 per barrel.
"U.S. shale oil production has continued to surprise to the
upside with U.S. domestic oil prices incentivising strong
investment," the report said.
Once prices fall and U.S. production slows, Goldman expects
cutbacks among OPEC producers including Saudi Arabia, which has
been content to let prices fall in the hope of forcing U.S.
shale producers out of the market.
"Any near-term OPEC production cut will be modest until
there is sufficient evidence of a slowdown in U.S. shale oil
production growth," the report said.
(Reporting by Aaron Sheldrick in Tokyo; Additional reporting by
Edward McAllister in New York and Jessica Jaganathan in
Singapore; Editing by Richard Pullin, Tom Hogue, Edmund Klamann
and Marguerita Choy)