The global supply glut can push the crude oil prices to as low as $20 a barrel, says a global brokerage firm.
Goldman Sachs said it sees chances of oil prices reaching that level in a worst case scenario.
"Forward demand expectations are lower as the emerging market economic outlook continues to deteriorate," the brokerage said in a report, according to USA Today.
The bank has cut its crude oil forecasts for 2016, saying the oversupply situation resulting out of output growth from the Organization of Petroleum Exporting Countries (OPEC), "resilient non-OPEC supply" and sluggish demand growth, might continue through next year.
"The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016," said Goldman analysts including Damien Courvalin, reported Bloomberg.
Goldman Sachs has revised its 2016 forecast for West Texas Intermediate (WTI) to $45 a barrel from earlier projection of $57 made in May. The bank has cut its estimate for Brent crude to $49.50 a barrel from $62.
Brent crude prices ended 1.5% lower at $48.59 on Friday, while the WTI closed at $44.63 a barrel.
Oil prices have fallen by more than 50% in the past 12 months due to rising concerns over the supply glut. Major oil exporters like Saudi Arabia are reluctant to cut the output, fearing loss of market share.
However, the oil production in the US, a main cause for a slump in oil prices, has recently shown some slowdown amid falling prices.
"While it is still uncertain about where, when and how the full supply adjustment will take place, we can say with far greater confidence that oil supply growth in North America will likely slow down if not reverse given recent drilling and investment patterns," Goldman said.
"We continue to view US shale as the likely near-term source of supply adjustment," it said.
Meanwhile, Iran is expected to resume its oil supply once the Western sanctions over its nuclear programme are lifted. Iranian oil exports could worsen the oversupply situation in the oil market.