As crude oil fell from the $100 level last summer, analysts have been trying to pick a bottom but had little success. While they have been trying to foresee a recovery, Goldman predicted oil will stay at lower levels for the rest of the decade.
In a note entitled "New oil order", which is meant to calculate what companies are poised to do well in an environment with lower oil prices, the bank notes, "We see potential for OPEC/the US to gain share longer term, even as WTI falls from $60 to $50 by the end of the decade."
Other market strategists have estimated that oil would move at least slightly higher over the longer term, as they forecast that non-OPEC related supply will start to decline. Goldman, on the other hand, suggests that the shale boom will continue even as OPEC refuses to cut back on production, Bloomberg reports.
"While the sharp reduction in US drilling activity is likely unsustainable, greater productivity in shale, startups of already sanctioned other non-OPEC projects and a greater willingness of OPEC to keep production levels elevated create a confluence of deflationary pressures for both oil and North American natural gas prices ... We now assume WTI oil prices of $57/$60/$60 per barrel in 2016/17/18."
