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Oil Sell off Continues, Goldman Cuts Price Forecasts

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Black gold or oil continued its downtrend in the trading session today breaking below the all important psychological support zone near the $80 level which is being seen as a huge negative for the commodity going forward. The stronger dollar and the rising inventory has played a vital role in keeping crude prices under pressure in the last couple of weeks. Many analysts believe that crude might continue this downtrend as OPEC nations are not cutting supply as of right now.oil

Most traders are speculating that most of the OPEC nations are working alongside with US government to keep crude prices lower so that the Russian economy suffers. Oil is the backbone for the Russian economy. The ruble in the past couple of weeks has hit multi-year lows and if many estimate that if the current downtrend continues, Russia might be heading towards a sovereign default. Investment Banking major Goldman Sachs Inc, cut its yearly price forecast for crude prices. In a report released today, the investment bank said that it now believes that the WTI crude would plummet to levels of $75 and remain there for most of 2015. This has been seen as  huge negative for traders who believed that the downtrend in crude had ended last week, as the prices bounced back from the $80 level.

Most technical chartists believe that the momentum is clearly in the hands of the bears. They believe that crude has already entered a bear market as it has corrected close to 20% from its recent high. Many believe that even though, lower crude prices are a boon for retail consumers and emerging market economies, lower crude prices are giving first clues of a global growth slowdown which is a huge negative for the medium to long term horizon. Also, the slowdown in Europe and China would hurt crude prices going forward, many believe.

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