Oil May Rise as Supplies Fall on Europe Crisis, Greely Says
Oil prices may surge if Europe resolves its sovereign debt crisis, bolstering demand while stockpiles are down, said David Greely, head of energy research at Goldman Sachs Group Inc. (GS) in New York.
“The physical markets are telegraphing severe tightness,” Greely said at the Inside Commodities conference today in New York.
Supplies have declined on speculation that the European debt crisis may lead to a global economic slowdown that undermines crude demand, he said. Falling inventories leave the market vulnerable to bullish surprises like supply disruptions because of tension in the Middle East, he said.
Oil for January delivery dropped $1.89, or 1.9 percent, to $98.60 as of 12:33 p.m. on the New York Mercantile Exchange.
Goldman raised its New York Mercantile Exchange oil price forecast for the first quarter of 2012 to $102 a barrel from $99.50 in October, according to an e-mailed report on Nov. 23.
Goldman increased its second-quarter price projection to $113.50 a barrel from $107.50 and its third-quarter estimate to $115 from $111, Greely said in the report. The fourth-quarter forecast was increased to $120 from $118.50 projected on Oct. 4.
Supplies in Cushing, Oklahoma, the delivery point for the Nymex contract, have declined 26 percent to 31.1 million barrels the week ended Dec. 2 from a record 41.9 million in April.
Oil advanced to a 31-month high of $113.93 a barrel in April after uprisings toppled leaders in Tunisia and Egypt and fighting to oust Muammar Qaddafi erupted in Libya, disrupting exports from a country that is home to Africa’s largest proved crude reserves.
To contact the editor responsible for this story: Dan Stets at email@example.com.