Goldman Sachs warns crude oil futures might drop below $20/bbl

Goldman Sachs repeated its warning that crude oil futures might fall below $20 per barrel in 2016.

The supply-demand imbalance in the market was such that in some geographies there was no capacity left to store surplus oil, the broker's head of commodities research, Jeff Currie, told Bloomberg TV in an interview.

“Once you breach storage capacity, prices have to spike below cash costs because you have to shut in production almost immediately,” Currie said.

The strategist added he “wouldn’t be surprised if this market goes into the teens.”

As of 1140GMT, front month West Texas Intermediate crude futures were 2.01% higher at $30.26 per barrel on the ICE.

Currie added that prices would swing between $20 and $40 per barrel over the next six to nine months as the market found its footing.

“The difference today versus other cycles in the past is that we have many risk-sharing arrangements put in place,” referencing floating exchange rates in the Russian Federation and liquid markets for high-yield debt Stateside.