Prices continue to push lower this week driven by with a few key factors this week: Federal Reserve policymakers indicated again that December may be the right time to increase the interest rate; the strength of the U.S. dollar is trading near a 7 month high; and pressure from a continuing global supply glut, expected to last into 2016. WTI ended Thursday down 21 cents after dipping to $39.89, its lowest since late August of this year when it was at $37.75.
Goldman Sachs said on Thursday that we could be at risk for a “sharp leg lower,” or a quick move downward, in oil prices. This is due to forecasted temperatures being milder than normal this winter, causing weaker demand for heating oil in the U.S. and Europe. This "would likely be the trigger for adjustments through the physical market, pushing oil prices down to cash costs, which we estimate are likely around $20 per barrel," according to Goldman.
The graph below illustrates the recent volatility in oil prices over the past week. As you can see, the market is sensitive to news events, which will likely to continue in the short term.
Graph: Zero Hedge