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Goldman raises price forecast for US crude
Goldman Sachs Group Inc, the world's biggest securities firm by market value, revised higher its New York crude-oil price forecast for the second half of this year by 32 per cent, citing supply constraints.
- Bloomberg
- Published: 23:39 May 16, 2008
London: Goldman Sachs Group Inc, the world's biggest securities firm by market value, revised higher its New York crude-oil price forecast for the second half of this year by 32 per cent, citing supply constraints.
Goldman now forecasts West Texas Intermediate, the benchmark crude grade traded in New York, will average $141 a barrel in the second half of the year, up from its previous forecast of $107. Prices will rise further in 2009, averaging $148 a barrel, the bank said.
"Supply constraints and a lack of scaleable substitutes are set to continue driving the long end of the oil curve higher," Goldman analysts, including Peter Oppenheimer and Jeffrey Currie in London wrote in a report on Friday.
Trend
The trend in the growth of oil supply has fallen to one per cent per annum, compared with global economic growth of about 3.8 per cent, the report said. "Given this imbalance, long-term oil prices will need to rise."
The front-month West Texas Intermediate futures contract on the New York Mercantile Exchange has averaged $104.30 a barrel so far this year. In the third quarter, Goldman Sachs forecasts the price will rise to $135.30 and $145.60 in the fourth quarter.
Goldman, one of the first to point to triple-digit oil more than two years ago -- a once unthinkable level -- earlier this month said oil could shoot up to $200 within the next two years.
Its note on Friday said that despite the advent of alternative sources such as biofuels, oil supply growth has slowed to 1 per cent from about 1.8 per cent in 2005 and less than the bank's forecast for 2008 world GDP growth of 3.8 per cent.
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