Bloomberg Goldman Keeps Crude Forecast at $85 a Barrel by End of Year

Nov. 10 (Bloomberg) -- 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.

To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net