Oil prices will probably continue to decline and could reach as low as US$30 a barrel, according to Gary Cohn, president of Goldman Sachs Group Inc.
“We’re probably in the lower, longer view,” Cohn, a former oil trader, said Monday in an interview with CNBC.
West Texas Intermediate (WTI) for March delivery fell 44 cents to close at US$45.15 a barrel on the New York Mercantile Exchange, the lowest settlement since March 11, 2009.
Crude oil has slumped almost 60% since June as the Organization of Petroleum Exporting Countries (OPEC) resisted calls to cut output and the U.S. pumped at the fastest pace in more than three decades. Drillers in the U.S. have begun to idle rigs as falling prices make wells aiming to tap shale reserves unprofitable.
Cohn said the commodity business is “very, very strong” because consumers and oil-producing nations are in different positions than they have been in the past few years.
“If you’re a consumer today and you can lock in these prices, you’re a lot more aggressive in the markets in hedging than you ever have been,” Cohn said. “The flip side is if you’re an oil-exporting country today and you’re looking at these oil prices and you see a fairly steep forward curve and you see 10 or 15 dollars of price higher a year forward then you do in the spot market, you have to consider trying to lock into that forward price.”