September 8, 2008 / 9:43 AM / in 9 years

Goldman's Murti leaves oil price forecast unchanged

LONDON (Reuters) - Goldman Sachs (GS.N) equity analyst Arjun Murti has left his forecast for oil prices unchanged but added prices could fall below $100 a barrel in the event of a global recession, according to a research note.

The forecast, prepared by Murti and other analysts at Goldman, left their price forecast for U.S. West Texas Intermediate crude in the fourth quarter 2008 unchanged at $130 a barrel and its full-year 2009 forecast at $140.

Slumping demand in the United States and other consumer nations has sent WTI tumbling from record highs over $147 a barrel in July to $107 a barrel on Monday.

Murti, one of the analysts who first predicted several years ago that crude prices would hit $100 as part of what he called a “super spike”, said earlier this year that prices could hit $150-$200 before the end of 2009 on rising global demand and faltering supply.

    “While we recognize downside global economic risks have risen in the past month or so, the Goldman Sachs Global Economics Research team continues to view modest global growth including a ‘happy slowdown’ in China as its central forecast, which we view as consistent with our continued bullish oil price outlook,” the research note said.

    While he maintained his bullish stance for oil, the note added prices could dip into double digits in the event of a global recession.

    “In the event a global recession and hard landing in China materializes, WTI spot crude oil prices would likely fall below $100 a barrel, absent an especially sizable supply disruption,” the note said.

    “Although fundamental support would be expected to exist around marginal costs ($80-$90 a barrel) given ongoing supply growth challenges, we recognize markets often overshoot fundamentals both to the upside and downside,” the note said.

    Reporting by Ikuko Kao and Matthew Robinson; Editing by Michael Urquhart

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