Goldman Sachs Group Inc. is maintaining its forecast for West Texas Intermediate crude to reach $85 a barrel by the end of this year and $95 next year as it expects the market to shift into a “global deficit” in coming months.

“Strong activity” in China’s petrochemical and metals sectors is likely
to provide support to global oil demand, while production outside the
Organization of Petroleum Exporting Countries is set to decline,
generating “further price and returns upside,” Goldman’s analysts led
by Allison Nathan said in a report dated Nov. 9.

“We believe that recent performance is just the beginning of strong
expected commodity returns over the coming 12-24 months,” the report
said. “Our economist’s outlook for the Chinese economy remains
constructive, which supports our view that demand for these
industrial-related petroleum products will likely remain strong,
providing support to global oil demand.”

WTI crude for December delivery traded at $78.91 a barrel, down 52
cents, in electronic trading on the New York Mercantile Exchange at
11:11 a.m. Singapore time. It reached a one-year high of $82 on Oct.
21, as rising equities boosted investor confidence and a falling dollar
encouraged buying of physical assets. Prices have gained 77 percent
this year.

Source: Bloomberg

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