Sept. 17 (Bloomberg) -- Goldman Sachs Group Inc. slashed its forecast for crude oil prices in New York as concerns the global credit crisis may lead to weaker demand outweigh supply constraints.

The most profitable U.S. securities firm cut its three-month benchmark West Texas Intermediate crude oil estimate to $115 a barrel from $149, and its six-month target to $125 from $142. Still, it said the crude market was ``substantially oversold'' and current prices present ``compelling buying opportunities.''

``We will stand by our bullish view on oil but just think it will now take longer to get to our previous price targets,'' Goldman analysts, led by Jeffrey Currie, said in a Sept. 16 report. ``The supply side of the market still remains severely constrained.''

Lehman Brothers Holdings Inc.'s bankruptcy and the U.S. government takeover of American International Group Inc. have roiled financial markets, raising concern global economic growth will slow. Crude oil futures have fallen 36 percent from the record $147.27 a barrel reached on July 11.

Goldman lowered its 2009 average oil price forecast to $123 a barrel from $148. Until now, Goldman had the highest WTI forecasts for 2009 among 35 analysts' estimates compiled by Bloomberg.

Hurricane Disruption

Oil could fall as low as $75 a barrel should a global recession take place, and could jump as much as $15 above Goldman's targets because of shortages after plants restart from hurricane shutdowns, the securities firm said.

The Goldman analysts closed out a spread trading recommendation they'd started four months ago after the bet made a loss of $4.73 a barrel, the report said.

In May Goldman recommended buying summer 2008 Brent crude futures and selling winter delivery contracts on the expectation that oil for delivery in the near term would increase in value relative to oil for delivery five months in the future.

Fluctuations in the quality of North Sea crude meant the opposite happened and resulted in the bet losing money, Goldman said.

The bank opened a new recommendation: to buy November Nymex gasoline futures and sell November crude, in the expectation that hurricane-led refinery disruptions will keep U.S. gasoline supplies tight, widening the fuel's price premium to crude oil.

Goldman said oil will rebound in the fourth quarter because of strong demand as U.S. refineries restart operations, speculators return to the market, OPEC cuts output and China purchases more crude after running down stockpiles.

Hurricanes Gustav and Ike disrupted oil field operations and refinery production this month. The Organization of Petroleum Exporting Countries agreed at its Sept. 9 meeting in Vienna to stick to its limit for 11 members of 28.8 million barrels a day, about 500,000 barrels a day lower than the group's July output.

Crude oil in New York rose today, snapping its worst two- day decline in almost four years. Oil for October delivery gained as much as $3.85 a barrel, or 4.2 percent, to $95 a barrel. Prices were at $94.112 at 3:21 p.m. Singapore time.

To contact the reporter on this story: Jane Lee in Kuala Lumpur at jalee@bloomberg.netAlexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

Last Updated: September 17, 2008 10:25 EDT