Friday, December 12, 2008
Goldman Sachs has slashed its forecast for crude oil prices to just $45 a barrel next year as demand wanes – in a sharp U-turn from its prediction of a spike to $200 made earlier this year.
In May, the investment bank’s energy equity team led by Arjun Murti made headlines when it predicted oil could rise to $150 to $200 a barrel within two years. Oil prices peaked at $147 a barrel in July and have fallen sharply since then as a rapidly deepening global economic downturn reduced demand for energy.
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The team, which also made waves in 2005 by calling crude’s rise to $100, cut its 2009 forecast to an average price of $45 a barrel. The analysts also think prices will bottom out early next year and that a shift from “demand destruction” to “supply destruction” will reignite the oil rally before long.
Murti’s team predicted a return to positive demand growth and shrinking non-Opec supply would lift prices to $70 a barrel by 2010 and to $105 by 2012.