Goldman Sachs analyst: Oil could fall below $20

An analyst with Goldman Sachs Group Inc. predicts that oil could drop below $20 a barrel as the market works its way through its current downturn, according to Bloomberg.

Jeff Currie, Goldman’s head of commodities research, commented to Bloomberg that, once oil storage capacities are exceeded, prices may have to drop low enough to quickly halt crude output.

Bloomberg noted that the International Energy Agency predicts that the global oil surplus will be bigger than previously estimated, increasing the risk of further price losses, as OPEC members Iran and Iraq bolster production that will add to the global oversupply.

Currie expects prices to swing between $20 and $40 a barrel over the next six to nine months as the re-balancing process plays out, but says that this should not derail the global economy, compared to other downturns, as risk-sharing arrangements are now in place.

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