Oil Prices Could Go As Low As $40 A Barrel: Goldman Sachs

While oil prices have had V-shaped recoveries in the past, caused by a lack of physical storage, tight freight markets, and strong balance sheets, a January 11 Goldman Sachs report argues that even with capex already falling sharply, changing industry conditions mean oil prices will have to stay depressed longer before there is enough of a reaction to push prices back up.

“We believe this bear market will likely be characterized by more of a U-shaped recovery in which markets take longer to recover and will likely rebound to far lower price levels from where they sold off from,” write Goldman Sachs analysts Jeffrey Currie, Damien Courvalin, Anamaria Pieschacon, and Michael Hinds. “The current industry has far greater storage...