Oil prices rose in New York, poised for a third weekly grow, after Goldman Sachs said prices may hit $85 a barrel by the end of 2009 as demand recovers and supplies minimise.
Crude oil for July 2009 delivery gained as much as $0.71, or 1%, to $69.52 a barrel on the New York Mercantile Exchange. It was traded at $69.40 a barrel at 11.20am Singapore time.
On 4 June 2009 the contract increased $2.69 to $68.81, the highest settlement since 4 November 2008 and the biggest increase since 18 May 2009. Prices are up 4.6% this week.
Oil surged to a seven-month high and gasoline increased after the bank raised its year-end forecast from $65. The dollar’s fall in the past six weeks has boosted crude prices as investors buy commodities as an inflation hedge.
The US Dollar Index, which values the greenback against a basket of international currencies, has fallen 5.5% since 7 May 2009, while crude has increased 22%.
On 3 June a government report showed that US crude oil inventories unexpectedly increased last week as fuel consumption fell.
According to the Energy Department crude oil supplies gained 2.9 million barrels to 366 million in the week ended 29 May. A 1.5 million-barrel drop was forecast in a news survey. The gain occurred as imports increased 9.9% and refineries raised operating rates to the highest in six months. Fuel demand dropped 900,000 barrels to 17.7 million barrels a day last week, the lowest since May 1999.
Brent crude for July 2009 delivery increased as much as $0.59, or 0.9%, to $69.30 a barrel on London’s ICE Futures Europe exchange. It was traded at $69.16 a barrel at 11.31am Singapore time. Futures rose 4.3% to end 4 June, 2009 session at $68.71 a barrel, the highest settlement since October 21, 2008.
Oil posted its biggest monthly gain in a decade in May 2009 on assumption a global economic recovery will trigger a rebound in demand. This increase is an opening to a price recovery in the second half of 2009 as the global economy stabilizes and crude inventories decline, Goldman said.
The bank set a 12-month price target of $90 a barrel, up from $70, and forecast $95 for the end of 2010.
Goldman’s New York-based energy equities research team, led by analyst Arjun Murti, in March 2005 has foreseen a super spike in prices. In May 2008 Murti said oil may rise to between $150 and $200 a barrel in the coming two years. The team modified its forecast after prices then slumped from a record $147.27 in July 2009.