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Oil prices extend falls; Goldman Sachs slashes price forecasts

Published 12/01/2015, 04:50
© Reuters. Oil storage tanks are seen at sunrise with the Rocky Mountains and the Denver downtown skyline in the background
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By Jacob Gronholt-Pedersen

SINGAPORE (Reuters) - Global oil prices extended their slide on Monday as Goldman Sachs lowered its short-term price outlook, while refineries in Ohio and Pennsylvania were hit by fires over the weekend, curtailing demand for crude in the U.S.

Both Brent and U.S. crude are at their lowest since April 2009 and have ended down for the past seven straight weeks.

Analysts at Goldman Sachs lowered their three-month price forecast for Brent to $42 a barrel from $80. They set their forecast for U.S. crude at $41 a barrel, down from $70, adding it would need to stay near $40 for most of the first half of 2015 before it would hold up shale oil investments.

"To keep all capital sidelined and curtail investment in shale until the market has rebalanced, we believe prices need to stay lower for longer," the analysts said in a report.

U.S. crude oil futures for February fell 84 cents to $47.52 per barrel by 0437 GMT. The February Brent contract was down 80 cents at $49.31 a barrel, after trading more than $1 lower earlier in the session.

New oil and gas well permits issued across the United States rose slightly in December after falling sharply in November on tumbling crude prices, data showed.

The drop in November pointed to a potential slowdown in the shale oil and gas boom that brought the United States into competition with Saudi Arabia for being the second largest crude producer behind Russia.

Refinery disruptions in Ohio and Pennsylvania threaten to add to a growing glut of crude by reducing demand from two sizeable plants, including the largest on the U.S. East Coast.

Venezuela said in a statement on Sunday it had agreed with Saudi Arabia to work to recover the oil market and oil prices "with state policies" between the two countries, without providing details.

Saudi Arabia, the world's biggest oil exporter, has said it won't support prices by cutting production and ignored calls from smaller OPEC members, including Venezuela, to react to falling oil prices at a meeting of the cartel in November.

© Reuters. Oil storage tanks are seen at sunrise with the Rocky Mountains and the Denver downtown skyline in the background

The weakness across oil markets became evident last week when for the first time since 2009, the entire oil complex slipped into contango, a market structure where prices for immediate delivery is cheaper than for delivery in future months.

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