"The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016 … the potential for oil prices to fall to such levels, which we estimate near $US20/bbl, is becoming greater", Goldman said in a research note.
Goldman cut its 2016 estimate for West Texas Intermediate to $US45/bbl from its May forecast of $US57, and also reduced its 2016 Brent crude prediction to $US49.50/bbl from $US62/bbl.
However, the International Energy Agency has predicted the "largest cut in non-OPEC supply in more than two decades", so US analyst Michael Lynch is more philosophical.
While he does not believe $US20/bbl is unrealistic, Lynch said Goldman's worst case scenario - primarily of interest to oil traders, especially in the paper market - was "almost certain to be temporary".
"For the industry, having the price touch $US20 briefly is much less important, and the industry's equities should not respond much to such a development," Lynch said.
"The price could halve, then double, ending up in the same place in a month or two, bankrupting some speculators but leaving the broader industry unchanged."
However, he conceded that an increase in oil prices is unlikely before either an economic recovery, a sharp drop in US shale oil production or other non-OPEC nations cutting production.
"Should US economic growth slow, or shale oil production fail to drop as predicted, the glut could indeed worsen in the next six months as Iranian production returns to the market," Lynch added.
HSBC lowered its oil price outlook to $US60/bbl for 2016 last week, while the US Energy Information Administration also revised its 2016 projection downward by $US8/bbl to $US59/bbl in its latest Short Term Energy Outlook.
The problem, Douglas Westwood director Steve Robertson said, was that oil remained in plentiful supply.
"Through the first half of 2015 we have seen a rapid increase in production globally, and particularly from the US and Saudi Arabia," Robertson noted.
"US production peaked in the summer and is now declining but overall we still expect global production in 2015 to have increased by 1.5 million barrels per day over 2014.
"The reasons we have such an overhang in supply are primarily twofold. We have seen record levels of upstream investment between 2011 and 2014 and given the scale of many of these projects there is a lag between the final investment decision and first production. Offshore projects can easily take four years from FID to first production.
"OPEC for the last 12 months has been engaged in a war of attrition with US shale producers, not only refusing to cut supply but pressing ahead with its upstream investments."
On the face of it, it would appear OPEC will win the war for market share - especially given the IEA's aforementioned prediction of non-OPEC production next year - with the hedging positions taken by US producers now expired and many of them facing dire financial circumstances.
However, Robertson says that if the cartel does win it will be at the cost of substantial national deficits for its member states.
Saudi Arabia has substantial funds in reserve, but countries such as Venezuelan are certainly feeling a more acute fiscal pain.
"Furthermore, advances in downhole completions have significantly increased the initial flowrates achieved in shale plays in the US, so whilst production is now declining, well productivity is increasing as the operators focus on the quality of plays," he said.
There are signs that the supply/demand gap may start to narrow next year.
The latest IEA Oil Market Report projects that oil demand will increase by 1.4MMbopd next year while DW's latest analysis, published last week in its World Drilling and Production Market Forecast, highlighted additions of only 368,000bopd next year, followed by additions of nearly 1MMbopd in both 2017 and 2018.
"This tightening of the supply/demand outlook could well be the catalyst for a recovery in both oil prices and in-turn the oilfield services sector as a whole," Robertson said.
