Goldman Sachs Turns Bearish on Oil, Sees Oil at $70 a Barrel by Year-End

Goldman Sachs also warned that the price of oil could fall to $50 a barrel if the "financial and evolving economic crisis cut deeper into demand." Goldman also predicts an end of 2009 price target of $107 a barrel for oil, and an average forecast of $86 a barrel for the year. Despite turning short-term bearish for oil and other commodities, Goldman Sachs maintains that commodities will remain in a bull market once the credit crisis resolves itself and economic growth regains positive momentum.
Goldman Sachs has made a number of well-publicized bullish calls on oil over the past couple of years, and many people point to their bullishness as one of the reasons why speculators have driven up the price of oil futures so much. Oil bears have been crushed over the past few years (up until recently) as oil futures have soared to dizzying heights.
In April of 2005, Goldman Sachs analyst Arjun Murti predicted that there would be a "super spike" in oil prices, and that oil could rise as high as $105 per barrel. At the time, the prediction seemed laughable - however, Murti's predictions eventually came true, and a star was born.
In May of 2008, a group of Goldman Sachs analysts, led by Arjun Murti, predicted that there was a "good chance" that oil would touch $150-$200 over the next 6-24 months. Oil futures rocketed higher on the call, and eventually traded north of $140 a barrel during the summer.
It will be interesting to see how many other firms follow in Goldman's footsteps and become short-term oil bears as well.
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