The risk that oil could fall as low as $20 a barrel is rising, with a persistent surplus requiring prices to remain lower for longer to rebalance the market, Goldman Sachs said, cutting its forecasts again. "While we are increasingly convinced that the market needs to see lower oil prices for longer to achieve a production cut, the source of this production decline and its forcing mechanism is growing more uncertain, raising the possibility that we may ultimately clear at a sharply lower price with cash costs around $20 a barrel Brent prices," Goldman said in a note on Friday, CNBC reported. The sources of stress are an abundance of oil and scarcity of storage space. The bank estimates the industry added around 240 million barrels of petroleum to storage tanks from January to August. "The oil market is even more oversupplied than we had expected," Goldman said. "We now forecast this surplus to persist in 2016 on further OPEC production growth, resilient non-OPEC supply and slowing demand growth."
