Wall Street giant Goldman Sachs , one of the biggest banks in commodity trading, has called an end to the oil price super-cycle.
Reversing years of bullish recommendations the bank is pointing to a rise in unconventional oil supplies in the United States and Canada in a new research note.
Goldman has been highest predictor among major oil price forecasters but has now cut its 2013 Brent crude oil forecast to $110 a barrel from $130. Brent traded near $112 today.
"Over the past three years long-dated Brent crude oil prices have shown signs of stabilizing around $90 per barrel. This suggests a return to the pricing regime that characterized the crude oil market in the 1990s," Goldman's analysts Jeffrey Currie and David Greely said in a note.
"We expect that going forward long-dated oil prices will be anchored by the potential for substantial growth in crude oil supplies from US shale, Canadian oil sands, and the deepwater. Net, we see a return to a structurally stable, but cyclically tight market," they said.
The US shale oil boom has seen the country's oil production rised to multi-decade highs, catching many industry watchers surprise, reshaping global oil flows.
The United States is now importing less crude from West Africa and the Middle East, leaving more volumes for booming demand in Asia. Some expect North America including Mexico and Canada to become a net oil exporter.
Goldman was a lead forecaster during the 2003-2008 oil price boom when unexpectedly robust demand in Asia outpaced global supply and prices soared as spare capacity in the Organization of the Petroleum Exporting Countries fell close to zero and the refining industry struggled to meet demand.
But just after the bank predicted a "super spike" to $200 a barrel in 2008, financial crisis hit the global economy. Oil prices collapsed from a peak of $147 in July 2008 to below $40.
US crude oil production has risen above 6.6 million barrels per day, the highest since 1995, thanks largely to new technologies that have allowed shale hydrocarbons to be produced more economically.
The development has fueled ideas of North American energy independence and a subsequent shift to lower oil prices.
Banks earn money in commodities by selling hedging services to clients. Goldman's note carried page section devoted to recommendations to oil consumers, producers and refiners.
Goldman this month reported significantly lower revenues from commodities which dragged down its trading businesses in the third quarter.
