Goldman cuts 2015 projections for U.S., world oil prices; domestic prices could hit $70 a barrel in spring

Goldman Sachs last night cut its 2015 forecast for global oil prices, saying West Texas Intermediate (WTI) crude oil prices, the benchmark for U.S. oil production, will average about $75 a barrel next year and may touch $70 a barrel sometime this spring.

Goldman also predicted that Brené oil prices, the benchmark for global production, will average about $85 a barrel in 2015.

As of Friday, the price of a barrel of WTI crude stood at $81.01, a drop of more than $16 a barrel from year-earlier levels, according to the Department of Energy's Energy Information Administration (EIA). The agency is expected to release more up-to-date figures sometime today. U.S. and world oil futures prices already dropped sharply in Monday trading in the wake of the Goldman forecast.

The firm had previously forecast a 2015 average of $90 a barrel for WTI, and $100 a barrel for Brené. According to reports, it determined that the world oil market will be amply oversupplied next year due to the continued increase in North American shale oil exploration and production and to moves by the Organization of Petroleum Exporting Countries, better known as OPEC, to ramp up its own production. At the same time, world oil demand will be relatively muted, leading to oversupply and lower prices, according to the firm.

The decline in oil prices is a major tailwind to freight providers and users, which count fuel as either the first or second highest cost item (the other being labor). A 1-cent-per-gallon drop in the price of jet fuel saves U.S. airlines about $190 million a year, according to trade group Airlines for America. For truckers, based on fuel mileage of 6.5 miles per gallon, a 1-cent drop in diesel fuel prices lowers a truck's fuel costs by two-tenths of 1 cent per mile, according to estimates from consultancy IHS Economics. The savings add up considering that a typical rig will log 100,000 miles or more per year.

As of Oct. 20, the average price for on-highway diesel fuel stood at $3.65 a gallon, down 8 cents a gallon from two weeks prior. The lowest prices were found in the Gulf Coast at $3.58 a gallon. The highest prices were in California at $3.91 a gallon. Those prices are likely to show further declines when the data covering the past week is released.