Goldman Sachs Predicts

Goldman Sachs Predicts 29% Return on Commodities

Posted on June 29, 2012 · Posted in Current Oil News

Bloomberg News on June 11, 2012 published results from a report made by Goldman Sachs Group, that shows an optimistic outlook for energy futures.  Goldman analysts predict a 29% return over the next year from Standard and Poors GSCI Enhanced Commodity Index, with energy and industrial-metal investment as leaders in returns. They believe oil prices will rebound if government policy makers can take measures to control the European debt crisis and improve economic growth in US and China.

Brent crude futures, the leading global price benchmark, fell at the end of last year as investors sold off oil contracts, which were prompted by their uncertainty with the government’s ability to prevent a financial crisis in Europe. David Greely, head of energy research at Goldman Sachs, indicated in their report that crude could recover if countries could alleviate the concerns and encourage economic growth.

The crude market could also be affected by the July 1st European Union oil embargo on Iran resulting in a decreased amount of supply available. “As the impact of U.S. and European sanctions come to bear on Iran, the loss of Iranian crude oil has returned the oil market to balanced,” according to Goldman. “We expect that the oil market will soon shift into a seasonally adjusted deficit in the second half of 2012 as demand picks up seasonally.”

Jeffrie Currie, head of commodities research for Goldman says, “Although the macroeconomic backdrop still remains uncertain, particularly in Europe, we believe that the sell-off in commodity prices is likely overdone and the price risks are shifting more to the upside.”

Goldman Sachs Group, a leading global investment and securities firm, has made solid predictions in the past based on the market. With the anticipation of economic growth and interruption of Iranian oil supply, it will likely result in an increased demand of crude oil and raised oil prices. This may be a good indication for investors to take advantage of energy commodities for the coming months.