Arjun Murti, the Goldman Sachs Group Inc. analyst who predicted a surge in crude oil prices, raised his fourth-quarter estimate for U.S. benchmark grade to $70 a barrel from $60 as output from non-OPEC members declines.
“We continue to gain confidence that the trough in the oil cycle has passed and a new up-turn is under way,” Murti, head of Americas energy, and analysts Michele della Vigna and Kelvin Koh said in a June 4 report. “Crude oil supply remains structurally challenged and that demand rationing prices will return in the years ahead.”
Murti raised his forecast for West Texas Intermediate crude to average $59 a barrel this year, from $50. Goldman Sachs’ London-based Jeffrey Currie said on June 3 that the price may reach $85 a barrel by the end of the year as demand recovers and supplies shrink.
Oil posted its biggest monthly gain in a decade in May, and this month traded above $69 a barrel for the first time since November on speculation a global economic recovery will trigger a rebound in demand. A decline in the value of the dollar has also drawn investors to crude and other commodities as an inflation hedge. Futures have surged 55 percent this year....MORE