Those hoping for a quick recovery in the price of oil might end up being disappointed, with Goldman Sachs and Barclays forecasting the slump to continue for much of 2015.
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Barclays has slashed its forecast average price of Brent crude for this year to $US44 a barrel, down nearly $US30 from its early-December forecast of $US72 a barrel, before recovering to $US60 in 2016.
Goldman Sachs is forecasting WTI oil to trade about $US44 a barrel for the first three-quarters of this year, lifting to $US65 a barrel by the end of the year as sharp cuts in capital spending and rising demand weigh on supply.
Overnight on Wednesday, Brent crude fell a further 2.3 per cent to $US48.47 a barrel, while WTI crude dropped 3.9 per cent to $US44.47 a barrel. Both oil futures have plunged more than 55 per cent since their 2014 peak.
"During 2015, lower prices should have only a muted effect on demand response and not be sufficient to balance the market on its own, because of various obstacles that prevent the full feed-through in end-user pricing," Barclays head of energy commodities Michael Cohen said.
"Even non-OPEC supplies ex-US will likely grow, riding the momentum from several years of sustained $US100 oil before the crash."
Even with a recovery in the price of oil to $US65 a barrel there is still sustained pressure on higher-cost players.
"Companies can expect a modest amount of relief next year from prices that are somewhat higher than today's, but even at $US65 a barrel a sizeable but still-to-be determined fraction of assets will not likely be economically viable for several more years," Goldman Sachs head of global credit strategy Charlie Himmelberg said.
Members of the Organisation of the Petroleum Exporting Countries have refused so far to cut output targets and that, along with the rise of shale oil in the United States and the US no longer being the largest importer of oil, has forced prices down.
"We expect to see further downside to prices in the next few months, with both WTI and Brent likely to trade into the high $US30s before the oil price decline is arrested," Barclays' Mr Cohen said.
"Recent developments are also raising questions about oil's long-term equilibrium. The forward curve five years out now appears to be converging on the $US70 level, suggesting that the market's long-held belief that oil prices need to average over $US100 per barrel to balance supply and demand over the long term is undergoing a fundamental reassessment."
