Oil prices are collapsing, hitting $79 a barrel  - how low can they go? A lot lower according to the team at Goldman Sachs (GS) who slashed its forecast for West Texas Intermediate (WTI) crude to $75 for most of 2015. And the team doesn’t see prices rising much from those levels in 2016 either.

The issue is simple, there is plenty of supply. Goldman notes OPEC members are no longer the first producers, plus non-OPEC exporting countries are ramping up growth as well. Those oil bulls who were betting on a rebound are licking their wounds. Net long positions rose nearly six percent last week, while short bets fell 20 percent, the most in three months  according to data from the U.S. Commodity Futures Trading Commission.

So no surprise energy stocks are getting hammered. The SDPR S&P Oil & Gas ETF (XOP) is down over three percent. The group is the biggest drag on the S&P 500 (^GSPC). The energy names have lost more than 16 percent this year, destroying value hunters and baffling those looking for a demand pick-up to go with their economic expansion.

The next catalyst for the sector may come from Dow member Exxon Mobil (XOM) when it  reports earnings on Friday. Investors want to know if and how the world's biggest oil company can grow profits when oil is in free-fall.  Exxon was also betting on production growth in Russia before those US sanctions got slapped on Putin's government. There may be one ray of hope for the sector, Halliburton (HAL) CEO Dave Lesar told investors on a conference call last week that he expected that low oil prices would be relatively short-lived. So far the market isn't buying it.

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