Oil Hits $70, Goldman Sachs Upgrades 2009 Prediction to $85
Jun 5th, 09
Crude oil prices rise to the highest mark for the year, briefly brushing $70 per barrel before settling to $68. The week finishes with a gain of nearly $2 a barrel, having rose steadily now for weeks.
The government released a report on the US labor market showing a loss of 345,000 jobs last month, which was better than the predicted 520,000 and actual 504,000 jobs lost in the prior month. The unemployment rate rose to 9.4% for May. Other reports show a drop in industrial and residential natural gas consumption, as demand wanes from suffering consumers and manufactures. There are worries that consumers will continue to reign in spending as gas prices reflect the recent rise in crude with the national average rising to $2.592 a gallon, per AAA reports.
Oil briefly hit a high of $70.32 before settling in the upper $68 mark. Crude prices have not reached the $70 mark since November and has been rising for months despite a looming surplus of petroleum and natural gas supplies. Economists and government reports say that a large amount of speculative money has flowed into the markets, potentially taking advantage of the weakened US dollar.
Goldman Sachs analysts released an updated oil price forecast for 2009 and 2010, predicting the price of a barrel of oil to average $59 for 2009, up from an earlier prediction of $50. The bullish analysts also raised the price on their 2010 crude price, bringing it up $10 to $80 a barrel. Although pronouncing an average of $59, the investment banking group expects to see prices of $85 by the end of this year, and possibly hitting highs up to $95 a barrel by the year 2011.
OPEC reflected similar sentiment upon the conclusion of their meeting, declaring that they would like to see prices in the $70 to $75 per barrel range before the end of the year. But not everybody is as optimistic, and it will remain to be seen if oil prices will find a settling point.