Oil prices set to tumble again in 2020, says Goldman Sachs

Oil prices are set to fall again this year in another blow the global economy as production resumptions created oversupply, according to investment bank Goldman Sachs.

The bank said it expected Brent Crude to reach $35 a barrel in the short term, compared with around Monday's price of $43, the Evening Standard reported, citing a note to investors.

“The collapse in refining margins to unprecedented lows is reflective of both over-valued crude prices as well as a more moderate demand recovery, two pillars of our short-term bearish view,” Goldman Sachs said.

After starting the year at around $64 per barrel, Brent Crude dropped below $19 in April as coronavirus lockdowns took place. At one stage traders were paying investors to take the commodity of their hands as the price slid into negative territory.

The recent rebound in prices would not be sustained, Goldman added, saying the mini-recovery was “fuelled by a macro risk-on backdrop and a policy induced Chinese crude import binge, yet fundamentals are turning bearish”.

Compounding the problem would be a further glut of supply as US shale and Libyan shut-in production came back online, Goldman said.