Cheaper Gas For The Holidays? Goldman Sachs Predicts Brent Oil Below $90 By Year-End - United States Brent Oil Fund, LP ETV (ARCA:BNO), Vanguard Energy ETF (ARCA:VDE)

Goldman Sachs Group Inc., which has been among the most bullish banks on oil price outlook, has reportedly lowered its price forecasts once again in the wake of increasing global supplies and reducing demand.

The bank has now lowered its Brent oil price forecast for December to $86 a barrel compared to its previous estimate of $95 a barrel, according to a Bloomberg report. This is Goldman’s third downward price revision in six months.

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Oil prices declined on Monday as investors and traders remained cautious ahead of the Federal Reserve’s policy decision this week. Brent futures maturing in August were trading 1.08% lower at $73.98 per barrel during Monday morning Asian trading session.

Supply increases from countries facing sanctions — Russia, Iran and Venezuela — are an important driver in the lower price outlook, according to Goldman. Russia’s supply production, in particular, has “nearly fully recovered” despite sanctions from the West, the report said.

“We have never been this wrong for this long without seeing evidence to change our views,” Jeff Currie, Goldman’s head of commodities research told Bloomberg TV last week.

Fed Policy: Recession fears are also having an impact on oil prices, with higher interest rates likely to be a “persistent headwind” to higher prices, wrote Goldman analysts including Callum Bruce and Currie in the note.

Market participants will be keenly watching out for any hints regarding the Fed’s future policy path as further hikes will hurt an already weak U.S. economy, leading to demand concerns from the world’s largest oil consumer.

The United States Brent Oil Fund BNO closed 0.98% lower on Friday while the Vanguard Energy Index Fund ETF VDE lost 0.63%.

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