WTI oil trading near $106 after Goldman’s surprise forecast

13 April 2011 13 April 2011

BonTrade

WTI oil prices open Wedneday’s trading session back near $106 a barrel after both WTI and Brent oil prices sold off yesterday, partly due to a surprise call from Goldman Sachs, calling the top of the market for crude oil and a range of other commodities, at least for the time being.

Latest WTI Oil Price

US Light crude oil futures for May 2011 delivery was trading at $106.56 a barrel, 07.15 GMT this morning on the NYMEX. WTI oil futures fell three percent in trading on Tuesday to settle at $106.17.

Goldman Sachs Oil Price Call

Goldman Sachs advised its clients to sell their investments in oil, copper, platinum and cotton, arguing that record levels of speculative trading in crude oil futures have pushed their prices up so much in recent months that in the near term, risk reward no longer favours holding those commodities.

In a note to clients, Jeffrey Currie, global head of commodities strategy at Goldman Sachs, said that its decision in December to advise clients to invest in oil had been driven by an expectation of rising demand from the leading emerging market players.

“While that did play out early this year in the non energy sections of the basket, it was overtaken by a supply shock driven by events in the Middle East. That has had the effect of introducing more downside risk into the trade, particularly given record levels of speculative longs in crude.” noted Jeffrey Currie at Goldman Sachs.