Not Looking Good Goldman $20 a Barrel.Many Energy Investors including myself had secretly believed that OPEC would pull back on their production, that North American production would decline more quickly and commodity prices would settle in at higher levels than where they are today. However the downward trend is still definitely on. Please note Goldmans comments today: The global surplus of oil is even bigger than Goldman Sachs Group Inc. thought and that could drive prices as low as $20 a barrel.
While it’s not the base-case scenario, a failure to reduce production fast enough may require prices near that level to clear the oversupply, Goldman said in a report e-mailed Friday while cutting its Brent and WTI crude forecasts through 2016. The International Energy Agency predicted that crude stockpiles will diminish in the second half of next year as supply outside OPEC declines by the most since 1992.
If WTI stays in this range do juniors with high debt survive? The answer has to be that it will be extremely challenging and any company looking for new injections of capital will be facing a wall of skepticism. Be careful out there and if you are investing in a junior make sure they do not have debt.