As oil prices dropped to six year lows Goldman Sachs slashed its three month and year long crude price forecast Monday by nearly 50 percent.
Goldman analysts cut the bank’s three month Brent price forecast to $42 per barrel from $80 per barrel and dropped its U.S. West Texas Intermediate forecast to $41 per barrel from $70, Reuters said.
The bank also revised its 2015 Brent forecast down to $50.40 per barrel from $83.75 and cut its 2015 U.S crude price to $47.15 per barrel from $73.75.
Although upstreams have curbed investments the current supply glut depressing prices will take some time to work off, the bank said.
Goldman expects that low prices will help move oil off the market and eventually bring prices back up.
“To keep all capital sidelined and curtail investment in shale until the market has rebalanced, we believe prices need to stay lower for longer,” Goldman analysts told Reuters.
Saudi Arabia, OPEC’S largest producer, has repeatedly refused calls to cut output in order to bolster prices.