Goldman Sachs Pegs Oil At Average Of $141/Bbl In Q3-Q4 Of 2008 - Marketwatch

NEW YORK (MarketWatch) -- Goldman Sachs once again issued a provocative forecast for the price of crude oil Friday, saying a barrel is likely to average $141 over the second half of the year -- a further 10% or so above the latest in what's been a string of record highs.

Making their projection on the same day that Saudi Arabia -- the world's biggest oil producer -- declined to raise output and that crude futures crested near $128 a barrel for the first time, Goldman commodities analysts Jeffrey Currie, Giovanni Serio, David Greely, Allison Nathan and Samantha Dart said the oil market appears to be in the midst of a historic repricing. See Futures Movers.

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"This time we cannot simply make the argument that long-dated prices will rise until they reach a point that motivates large-scale investment in non-conventional resources, as over the past four years the industry has hit significant constraints on scalability of these technologies," the Goldman analysts wrote in a research report.

In line with their analysis, Goldman's revised average second-half 2008 forecast for West Texas Intermediate crude works out to $141 a barrel, up from $107 a barrel. "The bottom line is that in 2008 the world has become very much dependent on non-conventional supplies in the form of biofuels and natural gas liquids and we are quickly learning that the current outlook for non-conventional resources at even today's price levels is as nearly as bleak as it was for conventional resources in 2004," Goldman said.

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http://www.marketwatch.com/news/story/goldman-sachs-sees-oil-averaging/story.aspx?guid=%7BF90247BE-28B2-43C0-8FE8-FB131D5C9F61%7D