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Goldman forecast: Oil at $85 a barrel by year's end

June 4, 2009 | 11:37 am

That pullback in oil prices Wednesday? Never mind.

Crude prices have surged again today, making another run at $70 a barrel, egged on in part by a consumer-unfriendly forecast from Goldman Sachs Group.

It was Goldman, you may recall, that a year ago was forecasting a potential "super spike" in prices to between $150 and $200 a barrel within two years. That prediction helped drive oil to its record of $145 a barrel in early July -- before the bubble finally burst.

Now, Goldman is bullish again, though not on the same scale as a year ago.

From Bloomberg News:

Crude oil rose to a seven-month high after Goldman Sachs said prices may reach $85 by the end of the year as demand recovers and supplies shrink.

Oil climbed more than 5% after the bank increased its year-end forecast from $65 a barrel and withdrew its prediction that prices will dip prior to a rally.

"As the financial crisis eases, an energy shortage lies ahead," Goldman analysts Jeffrey Currie in London and David Greely in New York wrote in a research report e-mailed today. The bank set a 12-month price target of $90 a barrel, up from $70, and introduced a forecast of $95 for the end of 2010.

Near-term oil futures were up $3.32, or 5%, to $69.44 a barrel about 11:30 a.m. PDT.

Crude had tumbled Wednesday amid a broad decline in commodity prices, after the latest government data on oil supply and demand were decidedly bearish.

But commodity bulls, and stock market bulls, aren’t worried about the present. They’re pinning their hopes on the second half of the year, when they expect those "green shoots" of economic recovery to turn into a verdant field.

-- Tom Petruno

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