Goldman Sachs Group Inc. (NYSE: GS) analysts said that crude oil prices are currently “significantly” below the level which is warranted by fundaments, resulting an opportunity for investors to hedge this year and next.
The firm said that the balance between supply and demand in oil will likely tighten during the second half of the year as global economic growth may increase demand, which will return inventories to what the firm called, “more normal levels” toward the end of the year, wrote analyst David Greely in a research note to investors on July 26th.
Goldman reduced its near-term oil price forecast and said that oil would trade in the lower end of its$85-$95 a barrel estimated range for the second half of the year because of high inventories and a fragile sentiment in the market.
According to Bloomberg News, “Goldman earlier this year recommended buying December 2010 West Texas Intermediate on the New York Mercantile Exchange at $77.75 a barrel. This contract was trading at $80.31 a barrel at 12:01 p.m. in Singapore, $1.40 higher than that for delivery in September.”
The Goldman Sachs Group, Inc. (Goldman Sachs) is a bank holding and a global investment banking, securities and investment management company. The Company provides a range of financial services to customers, including corporations, financial institutions, governments and high-net-worth individuals. Its depository institution subsidiary, Goldman Sachs Bank USA (GS Bank USA), is a New York State-chartered bank. It operates in three segments: Investment Banking, Trading and Principal Investments and Asset Management and Securities Services. In March 2010, the Company’s subsidiaries sold the La Francia mine and related infrastructure assets, including Concession 5160, and Adromi Capital Corp., the holder of the La Francia II concession, to a subsidiary of The Goldman Sachs Group, Inc. In May 2010, Nexen Inc. sold its natural gas trading operations to a unit of The Goldman Sachs Group, Inc.
Shares of Goldman Sachs Group Inc. (NYSE: GS) traded down 0.65% hitting $147.23 during mid-day trading on Tuesday.
