By Chris Flood
Published: June 4 2009 11:50
Crude oil prices rose by more than $1 on Thursday, rebounding after a sharp fall in the previous session and leading a rally across commodity markets.
Base metals and agricultural commodities rose while gold stabilised after dropping in Wednesday’s session.
In oil markets, Nymex July West Texas Intermediate rose $1.03 to $67.15 a barrel while ICE July Brent added $1.27 at $67.15 a barrel.
Goldman Sachs, Wall Street’s largest commodities dealer, raised its oil price target for the end of 2009 to $85 a barrel, from a previous projection of $65 a barrel, and said prices could flirt with the $100 level by the end of 2010.
“The recent rally in WTI prices is likely to be but the first stage in the oil price rally that we expect will accompany a recovery in economic activity,” said Jeffrey Currie, commodity strategist at Goldman Sachs.
He added: “In all, we expect the rally we have just observed to be followed by three more stages, creating a four-stage rally in oil prices in 2009 and 2010.”
Goldman said that the second half of 2010 was likely to see a return to energy shortages as dwindling spare capacity among Opec producers would be unable to meet rising demand as non-Opec production growth would be restricted by limited investment in infrastructure.
The bank’s previous forecast was for oil prices to drop to $45 a barrel in the short-term, a projection that Goldman Sachs said it was now “omitting”.
Goldman had warned earlier this year that oil prices could drop as low as $25 a barrel because of the economic crisis, a view that has proved too pessimistic.
Gold traded at $966.20 a troy ounce after ending trading in New York on Wednesday at $962.15, under pressure from a rise in the dollar which prompted profit taking.
Among the base metals, copper rose 1 per cent to $4,890 a tonne while aluminium added 1.5 per cent at $1,490 a tonne.
Copyright The Financial Times Limited 2009