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Goldman Sachs Cuts 3-Mo WTI Oil Forecast To $115/Bbl
17 Sep 08 05:50
LONDON -(Dow Jones)- Goldman Sachs Wednesday cut its crude oil price forecasts through 2009, citing greater price sensitivity of demand to recent high prices.
A sharp rally in June and July - which curtailed oil demand in industrialized economies - had changed the near and medium-term price path, prompting the bank to lower its three-month West Texas Intermediate oil price target to $115 a barrel from $149 a barrel.
"Not only did the overshoot increase the forward price elasticity of demand, making demand more price sensitive, but it also restrained economic activity as global economic growth breached energy supply constraints, particularly in the emerging markets, where energy shortages were the most severe," Goldman Sachs analysts said in a note dated Tuesday.
The bank also revised lower its average 2009 WTI price forecast to $123 a barrel from a previous $148 a barrel, and cut its six-month-ahead target to $125 a barrel from $142 a barrel.
Despite the downward revisions, Goldman Sachs maintained its bullish view on oil, but suggested it will take prices longer to get to its analysts' previous targets.
Current prices are now "substantially oversold," and present a compelling buying opportunity, the analysts said. "A combination of financial concerns, skepticism, and real and perceived demand weakness has pushed prices below the long-term economics of the industry, which we believe is above $100 a barrel."
Prices could still spike $10 to $15 a barrel above their new targets if any autumn shortages occur in the U.S. as oil production and refining facilities return from recent hurricane shut-ins, Goldman said.
However, should macroeconomic concerns become a full-blown global recession - a development the bank says its economists view as having less than a 15% probability of occurring - then prices could dip as low as $75 a barrel, it said.
http://www.nyse.com/interface/jsp/N...ewsHeadlines&sid=ON 09/17 388&isdowjones=true
17 Sep 08 05:50
LONDON -(Dow Jones)- Goldman Sachs Wednesday cut its crude oil price forecasts through 2009, citing greater price sensitivity of demand to recent high prices.
A sharp rally in June and July - which curtailed oil demand in industrialized economies - had changed the near and medium-term price path, prompting the bank to lower its three-month West Texas Intermediate oil price target to $115 a barrel from $149 a barrel.
"Not only did the overshoot increase the forward price elasticity of demand, making demand more price sensitive, but it also restrained economic activity as global economic growth breached energy supply constraints, particularly in the emerging markets, where energy shortages were the most severe," Goldman Sachs analysts said in a note dated Tuesday.
The bank also revised lower its average 2009 WTI price forecast to $123 a barrel from a previous $148 a barrel, and cut its six-month-ahead target to $125 a barrel from $142 a barrel.
Despite the downward revisions, Goldman Sachs maintained its bullish view on oil, but suggested it will take prices longer to get to its analysts' previous targets.
Current prices are now "substantially oversold," and present a compelling buying opportunity, the analysts said. "A combination of financial concerns, skepticism, and real and perceived demand weakness has pushed prices below the long-term economics of the industry, which we believe is above $100 a barrel."
Prices could still spike $10 to $15 a barrel above their new targets if any autumn shortages occur in the U.S. as oil production and refining facilities return from recent hurricane shut-ins, Goldman said.
However, should macroeconomic concerns become a full-blown global recession - a development the bank says its economists view as having less than a 15% probability of occurring - then prices could dip as low as $75 a barrel, it said.
http://www.nyse.com/interface/jsp/N...ewsHeadlines&sid=ON 09/17 388&isdowjones=true
