Oil to rebound, dip below $30 possible: Goldman

By Jane Merriman

LONDON (Reuters) - The price of U.S. crude oil is expected to rebound sharply later this year, but may sink below $30 a barrel in the near term, said a Goldman Sachs (GS.N) analyst on Monday.

Goldman's average oil price forecast for the first quarter of 2009 remains at $30 a barrel but then recovers to $65 in the fourth quarter.

"You still have potential for it to drop below $30," Jeff Currie, head of the bank's commodities research team, told Reuters.

The bank with the biggest share in commodities and energy markets had been among the most bullish forecasters of the oil price. It had last year predicted a crude oil spike to $200 a barrel. Currie said in a presentation to investors that Goldman Sachs was starting to argue that oil -- which has plunged more than $100 from a record near $150 last July -- may have reached a bottom.

U.S. crude was $2.04 down at $34.47 a barrel by 10:31 a.m. EST.

He pointed to supply cuts from the Organization of the Petroleum Exporting Countries and potential shut-ins of non-OPEC supply as factors that could ultimately spur a sharp rebound.

Currie expected OPEC to get 75 percent compliance with its supply cut of 4.2 million barrels per day (bpd), while falling demand and prices would put pressure on non-OPEC producers to shut down.

STORAGE FULL

"If storage is full then there is an incentive to shut in (for non-OPEC) production," he said, adding that most of the world's primary storage was already full.

"If you see cuts in non-OPEC production you could have seen the bottom," Currie told investors.

On the demand side, Goldman estimated the downturn in the global economy would mean a sharp pull-back in oil demand of an estimated 1.7 million bpd in 2009.

Demand fell last year in industrialized countries, this year emerging markets such as China and the Middle East would join them, Currie said.

But Goldman remains bullish on oil for the longer term.

"The long-term story is that the imbalances (in the market) haven't changed and the market will run into significant problems if there is a rebound in demand."

On the supply side, there are no large scale next-generation projects to come onstream such as Mexico, the Gulf of Mexico, the North Sea and Alaska did in the 1980s.