Goldman Sachs has bad news for anyone banking on the oil price rebounding any time soon, saying in a report that the price of crude could fall to $20 per barrel by the time it's all said and done.

The investment bank downgraded its oil forecast on Friday, saying the oil glut is proving to be far worse than forecast and shows no sign of fixing itself in the short or medium term.

"The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016," the analysts wrote in a note to clients on Friday.

The bank now assumes that a barrel of West Texas Intermediate, the dominant North American oil blend, will average $45 through next year — down from $57 a barrel the last time the bank had a forecast.

Oil lost another $1.15 on Friday to close at $44.77, so a call to stay at that level for the next 18 months or so can't be good news for oil companies

But the future could be even worse — that's just the scenario the bank thinks is most likely.

There's an outside chance the price could fall even lower because "while not our base case, the potential for oil prices to fall to such levels, which we estimate near $20 a barrel, is becoming greater as storage continues to fill," the bank said.

Supply and demand imbalance

Goldman Sachs listed several reasons for their pessimism. It thinks OPEC isn't as willing as some people believe to turn off the taps until prices rebound. Instead, OPEC seems to be increasing production, trying to rake in as much revenue as possible even if it means they are making less money for every barrel.

The International Energy Agency said Friday it expects shale oil producers in the U.S. will begin to slow output at some point, and expects non-OPEC production to drop nearly half a million barrels to 57.7 million barrels a day. But that will barely make a dent, as the world is oversupplied by almost three million barrels a day.

Goldman says it doesn't see much evidence that the supply side is going to slow down, but on the demand side, meanwhile, there are other dark clouds. China's economy, the second-largest in the world, has driven the oil market for several years, but there are clear signs of a slowdown.

China's slowdown could create a negative feedback loop, the bank said, as it could create a vicious cycle for countries that export oil and other things to China, including Canada.

"Not only is emerging market growth slowing, but the benefits from lower prices are most likely behind us," the bank said.