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London: Arjun Murti, the Goldman Sachs Group Inc analyst who predicted a crude "super spike" in March 2005, said a sustained rally in the oil price is unlikely because of concern demand will weaken.
Murti and other equity energy analysts said slower global economic growth and technical selling pressure has made its $120 (Dh440) a barrel price forecast for the fourth quarter vulnerable to "downside" risk, according to a research note dated October 6.
Banks have been forced to slash their oil price forecasts after crude futures slumped from their July 11 of record $147.27, driven lower by speculation the slowing global economy will erode consumer demand. Oil has fallen more than 37 per cent since then and Opec President Chakib Khelil on Monday said prices will continue to decline next year.
"Oil prices increasingly appear unlikely to sustain a rally until global GDP expectations bottom," Goldman said in the note.
Commodity analysis
"While we believe oil supply/demand fundamentals are not as bearish as is sentiment, we recognise that concern continues to mount towards global oil demand growth."
New York-based Murti is a managing director at Goldman and head of Americas equity energy research. He first wrote of a "super spike" in March 2005, when he said oil prices could range between $50 and $105 a barrel through 2009. In May this year, he said prices may rise to between $150 and $200 a barrel within two years as growth in supply fails to keep pace with demand.
Last month, the team slashed its 2009 oil price forecast by more than 20 per cent to $110 a barrel from $140 a barrel.
A team of Goldman commodity research analysts led by Jeffrey Currie in London forecast prices to average $123 a barrel next year.
Crude futures for Nov-ember delivery gained $2.61, or 3 per cent, to trade at $90.42 a barrel on the New York Mercantile Exchange at 8.07am. London time. Crude declined to the lowest in 8 months yesterday.
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