Goldman Sachs reiterated on the 20th that the end of 2008 US crude oil futures prices will rise to 149 US dollars / barrel forecast, and said that the strong crude oil fundamentals is more important than the stronger US dollar. Earlier this year, Goldman Sachs analysts predicted that due to global demand growth and supply decline, oil prices will rise to 150 US dollars/barrel to 200 US dollars/barrel before the end of 2009.
Goldman Sachs said that the recent complex and volatile factors have more impact on crude oil than the dollar. Before July 11, US crude oil futures prices rose to a record high of $147.27 per barrel. Since then, the price of oil has fallen by more than 22% to around $115 a barrel, due to concerns about demand from the economic slowdown in the OECD and a rebound in the dollar.
At present, the market generally believes that the weakness of the US dollar in the first seven months of 2008 was one of the key factors for the rise in crude oil prices. Investors bought the dollar-denominated commodities to hedge against the impact of the falling dollar. Before the exchange rate between the US dollar and the euro fell to an all-time low of 1.6038 U.S. dollars, U.S. crude oil prices have already reached a record high of four days. Crude oil prices fell sharply after the dollar fell to record lows. Many analysts believe that the US dollar exchange rate is at the bottom, which will encourage investors to release commodity hedges.
Goldman Sachs said that in the long term, there is almost no correlation between oil prices and the US dollar. Goldman Sachs believes that the crude oil market will be supported by the following factors in the short term: OECD oil inventories, US oil demand may recover, and China's oil demand growth is nearly 10% year-on-year.
At the same time, in the face of the recent rapid decline in oil prices, the U.S. Energy Information Administration believes that Saudi Arabia may cut its output in the near future to stop the decline in oil prices and may reduce production to the level before the increase in output. Saudi Arabia’s oil production cuts will be a factor in eliminating the 22% drop in oil prices since the record price of 147.27 US dollars per barrel on July 11. Saudi Arabia had promised to increase production of 550,000 barrels of oil in May and June. When the increase in crude oil to the buyers' hands resulted in an increase in inventories, the price of crude oil began to fall. The U.S. Energy Information Administration said on the 20th that, as of the week of August 15, US crude oil inventories increased by 9.4 million barrels, which is the largest one-week inventories increase since March 2001.
The U.S. Energy Information Administration estimates that the price of crude oil per barrel will be between 120-130 U.S. dollars for the rest of 2008. The expectation is based on the slight decline in oil demand in the United States in the second half of the year, and there will be no major supply disruptions.
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