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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (9241)	9/12/2006 10:11:51 PM
From: Rolla Coasta	Respond to of 217557

Goldman Sachs says oil fall overdone; risk to the upside Update: 5:24 PM ET Sep 12, 2006 LONDON (MarketWatch) -- Goldman Sachs' (GS) commodities research arm said Tuesday the hefty fall in the price of crude oil to a five-and-a-half month low was overdone and falling retail fuel prices would underpin demand and maintain robust growth. Goldman Sachs, whose commodity index has attracted some $60 billion of funds and in which crude and natural gas have about a 50% combined weight, said in a note: "We believe that the risks are now biased on the upside" and it would keep its forecast for U.S., light, sweet crude in the final quarter of this year unchanged at $75 a barrel. Crude futures have fallen 17% since they hit a high in mid-July of $78.40/bbl, as concerns about a slowdown in economies, a perceived easing of tension in the Middle East and healthy fuel stockpiles came together. The note said: "Oil demand, especially in the United States and China, continues to grow significantly on a year-over-year basis." Chinese crude imports remained high and U.S. Department of Energy data showed demand for transportation fuels "continued to be exceptionally strong in the last week of the summer driving season." "We would expect demand to receive further support even if economic activity slows," it said. "Just as oil demand missed the economic expansion over the past two years, oil demand is likely to miss the economic slowdown, creating a much smoother demand path." Goldman Sachs said the surge in oil prices seen in recent years "has not been cyclical in nature" but was based on "the need to develop long-term, capital intensive projects in a sector characterized by rising costs and uncertainty has generated substantial structural support to long-dated prices not tied to the economic cycle." It also noted that if U.S.-led sanctions against Iran were implemented it could spur oil prices higher and that the most intense part of the hurricane season in the U.S. Gulf had only just begun. U.S. light, sweet crude for October delivery was down 64 cents at $64.97/bbl Tuesday, close to levels seen in March. -Contact: 201-938-5400 marketwatch.com.