There is a chance that oil prices could fall below an unprecedented $20 per barrel, according to US investment giant Goldman Sachs.
Currently trading at around $48 per barrel, Brent crude oil has suffered a huge collapse over the past year or so. Last summer, it was trading at $115 per barrel before crashing as low as $40 before Christmas. Now, with supply still outweighing demand, Goldman Sachs believes prices could fall below $20.
Its analysts said: "The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016 on further OPEC production growth, resilient non-OPEC supply and slowing demand growth, with risks skewed to even weaker demand given China’s slowdown and its negative EM feedback loop... While not our base case, the potential for oil prices to fall to such levels, which we estimate near $20 [per barrel], is becoming greater as storage continues to fill."
However, it is worth taking this semi-forecast with a pinch of salt. Goldman Sachs have previously been found suggesting that oil prices would hit $200 by 2010 (paywall) - but that never happened.
Looking at its more likely forecast, Goldman Sachs expects oil prices to sit at around $49.50 in 2016, down from its earlier estimations of $62.
US output to fall
Elsewhere, the International Energy Agency (IEA) has forecast output in US oil to see its steepest decline since 1992 as a result of low prices.
The higher prices seen in recent years encouraged oil companies to invest in the industry, sparking record production levels. But with over-supply widely accepted as the reason behind the fallen oil prices, the US intends to slash its output.
Opec (Organization of the Petroleum Exporting Countries), however, led by Saudi Arabia is adamant that it will maintain high levels of production. Such has been Opec's insistence that it has led to some accusing Saudi Arabia of using Opec and its oil production for political reasons in the Middle East.
The IEA said: "Oil's price collapse is closing down high-cost production from Eagle Ford in Texas to Russia and the North Sea, which may result in the loss next year of half a million barrels a day, the biggest decline in 24 years."