Goldman Sachs Group Inc. today raised its forecast for crude oil prices for the second half of 2008 to $141 a barrel because of growing demand and tight supply, while a consumer sentiment index fell to a 28-year low.
Goldmans new forecast is 30% higher than on May 6 when analysts at the firm, which is a major player in energy markets, had already upped their forecast to $108 a barrel for the U.S. light sweet crude benchmark, from $96 in 2008; to $110 from $105 in 2009; and to $120 from $110 in 2010. Tight supply conditions continue to be the primary catalyst for higher crude prices, the Goldman analysts wrote in a research note today.
On the New York Mercantile Exchange, the oil contract for June delivery, which had closed Thursday at $124.12, spiked up to a record $127.82 in morning trading today. It closed at $126.29 after the Energy Department said it has canceled oil shipments into the 700-million-barrel Strategic Petroleum Reserve, which is 97% full, beginning in July. Also, Saudi Arabia said it will increase oil output by 300,000 barrels a day starting in June.
Rising gas prices were one factor in the Reuters/University of Michigan index of consumer sentiments fall to 59.5 in early May from 62.6 in April. Analysts said the index reading released today was the lowest since 58.7 in June 1980, while the all-time low was set at 51.7 in May 1980.