Goldman Expects Crude to Fall to $30 Early Next Year
http://www.bloomberg.com/apps/news?pid=20602099&sid=aQjCBWe8uEFI&refer=energy
Dec. 12 (Bloomberg) -- Goldman Sachs Group Inc. cut its forecast for oil prices in the first quarter by half to $30 a barrel as the global economic slowdown curbs consumption.
Crude demand will fall by 1.7 million barrels a day in 2009, analysts Jeffrey Currie and Allison Nathan said in a note dated yesterday. Goldman previously expected West Texas Intermediate, the U.S. benchmark oil, to average $62 in the first quarter.
The worldwide economic decline has reduced consumer spending and weakened demand for fuel. Demand growth in China and other non-member states of the Paris-based Organization for Economic Cooperation and Development is âon the cusp of a sharp deceleration,â the analysts said.
Crude has fallen for five straight months since trading at a record $147.27 a barrel, as countries including the U.S., Japan and Germany have entered recessions. Goldman Sachs forecast in July that oil would recover to $149 by the end of this year because consumer demand was ârestrained, but not destroyed.â
The continuing slump in oil prices spurred the Organization of Petroleum Exporting Countries to cut output for the first time in two years when it met in October.
OPEC will need to lower production by an additional 2 million barrels a day next year, combined with a 600,000-barrel- a-day reduction by non-OPEC countries, to ârebalanceâ the oil market, Goldman Sachs said. The group next meets Dec. 17 in Oran, Algeria, and will probably agree on further cuts, according to OPEC oil ministers including Algeriaâs Chakib Khelil, Qatarâs Abdullah bin Hamad al-Attiyah and Venezuelaâs Rafael Ramirez.
North Sea Brent
Goldman Sachs expects U.S. oil futures to average $45 a barrel next year, down from $80 previously. In May, the bank forecast an average price of $148 a barrel for 2009. North Sea Brent crude will average $28.50 in the first quarter, it said.
The International Energy Agency yesterday forecast global crude consumption next year of 86.3 million barrels a day.
Oil for January delivery traded at $45.06 a barrel, down 6.1 percent, in electronic trading on the New York Mercantile Exchange at 12:20 p.m. London time.
