By Ovunc Kutlu
NEW YORK (AA) - American oil benchmark West Texas Intermediate (WTI) is expected to hover around $43 per barrel in the fourth quarter, Goldman Sachs said Tuesday.
"Our 4Q16 oil supply-demand balance is weaker than previously expected given upside surprises to 3Q production," according to a report from the bank. Goldman previously forecast prices at $50 per barrel.
The company now anticipates a global crude oil surplus of 400,000 barrels per day in the last quarter, instead of the 300,000 previously estimated.
Oversupply and low global demand are the major reasons behind the oil slump since June 2014 when prices were at $115 per barrel.
OPEC countries are holding an unofficial meeting in Algiers later this week to try to freeze production levels in an attempt to bring balance to the market.
Goldman, however, thinks the move would provide only a short-term solution if an agreement is reached by cartel members at the meeting Wednesday.
"We find that the potential for less [supply] disruptions and still relatively high net long speculative positioning leave risks," it said.
Goldman kept its WTI oil price forecast for next year unchanged at $52 per barrel, as supply cuts in the Americas would not trim oversupply in the global market since it would be replaced by production in Asia.
For 2017, the firm expects production declines in the U.S., Mexico, Venezuela and Brazil, while new projects in Canada, Russia, Kazakhstan and North Sea would bring new supply to the market.
International benchmark Brent crude price is anticipated to average between $42 and $52 per barrel, depending on supply disruptions from Nigeria and Libya, according to Goldman.
WTI traded around $44.5 on Tuesday as Brent was at $46.3.