Goldman Sachs Group Inc. analysts predict oil prices will decline to $45 a barrel because of weak demand and rising inventories before recovering to $65 by the end of the year.
The commodity research analysts said for the “near term” they recommend selling West Texas Intermediate crude oil futures for July delivery on the New York Mercantile Exchange. The contract closed at $54.56 on April 17 and had fallen today to $52.35 at 12:45 p.m. London time.
“This weakness is being driven by deteriorating oil demand,” Goldman analysts David Greely in New York and Jeffrey Currie in London said in a report dated April 17. “In the U.S., oil demand has fallen to its lowest level since October of last year, while implied oil demand in China and the non-OECD countries fell back to 2007 levels in February.”
Oil has fallen almost $100 from a record $147.27 a barrel in July as the financial crisis and global recession slow consumption. The International Energy Agency and Organization of Petroleum Exporting Countries last week cut their demand forecast for an eighth month as the slowdown worsened.
Crude oil demand and prices may “stabilise” in the second half as long as the global economic contraction slows and OPEC continues to restrict output, BP Plc Chief Economist Christof Ruehl said today in an interview in Dubai.
An “improving economic environment” will help push prices to $65 a barrel by the end of the year, Greely and Currie said.