Oil Price Forecast

[dan_s]

Goldman Sachs, nicknamed the "permabull" for its relatively high commodity price outlooks, was the latest investment bank to join the movement and lower its oil price forecasts. Goldman now expects WTI to average $109 per barrel over 2012 - down from $123.50 - and foresees Brent crude averaging $120 per barrel instead of $130. Goldman also cut its expectations for economic growth in China, as the US and Europe order fewer Chinese-made products.

Interestingly, a recent survey found that Goldman's analysts were the most accurate price forecasters in 2011. And while Goldman's analysts cut their price forecasts, they also noted that the market has seen heavy destocking ahead of a potential crisis. As such, "If a crisis does not occur, the oil market risks running into pressing supply constraints, requiring sharply higher prices to force demand in line with supplies," the bank said.

[dan_s]

Crude oil climbed to the highest level in two weeks as the leaders of Germany and France pledged to stem the European sovereign-debt crisis.

Futures rose as much as 3.8 percent after German Chancellor Angela Merkel and French President Nicholas Sarkozy said yesterday they will deliver a plan to recapitalize the region’s banks and address the Greek crisis by Nov. 3. The euro surged against the dollar after the announcement. U.S. employers added more workers in September than forecast, a report showed Oct. 7.

“Optimism is coming back into the market,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “As concerns about the European debt crisis and the U.S. economy heading into recession ease, oil prices are going to climb. These headlines are a sign that demand will increase.”