U.S. Crude Enters Technical Bear Market Amid New Predictions That Prices Will Remain in the $45-$50 Range In 2017

The possibility of oil in the 30s is still strong, say analysts.

The rough week for oil hit new lows on Thursday, with US crude entering a technical bear market and closing at $41.14 per barrel, while Brent crude fell to $42.70 per barrel.

This came on the heels of the two benchmarks hitting multi-month lows on Wednesday and giving credence to the growing contention that oil will sink to the $30s before recovering at year-end.

But even the hope of a recovery in the fourth quarter of 2016 seems to be waning: Goldman Sachs in a note on Thursday said that due to little change in global supply and demand, oil will remain in the $45-$50 range until mid-2017.

The bank stated, "The improvement in oil fundamentals remains fragile and continues to feature large offsetting forces: wildfires have helped offset surprisingly strong Iran production, slowing demand growth in India and China in 2H16 will help offset production issues in Nigeria and Venezuela, and finally product builds have offset crude draws."

However, Goldman is not overly pessimistic about the near-term market either, pointing out that, "In particular, we find gasoline demand continues to grow robustly globally and expect this to continue as our economists forecast strong consumer spending.

"In our view, it would take a global demand slowdown, a sudden sharp halt in China's crude inventory build, or a ramp up in Libya or Nigeria production to take prices back below $35 a barrel."

Tamas Varga, lead oil analyst at PVM Oil Associates, is not convinced: he told CNBC that record high stocks and oversupply could drive crude down to the mid $30s: "The trend is still down and the bears seem to be in control."

Presumably adding to the bearish attitude is a disclosure from Genscape of a build of nearly 328,000 barrels at the Cushing, Oklahoma delivery hub for U.S. crude futures during the week to July 26, as well as Royal Dutch Shell reporting a second quarter income of $1 billion compared with expectations of $2.2 billion - a more than 70 percent fall in quarterly profit.

If nothing else, traders can take comfort that there hasn't been a repeat of a sentiment expressed in February by Jeff Currie, head of commodities research at Goldman Sachs, who told Bloomberg Television that "I wouldn't be surprised if this market goes into the teens."