Goldman Sachs cuts oil forecast again

Bank drops crude outlook for second time in less than a month, expects prices to hit $69 a barrel this year due to warmer weather.

SINGAPORE (Reuters) — Oil price bull Goldman Sachs has cut its 2007 U.S. crude forecast for a second time in as many weeks after persistently warm winter weather and a commodities-wide sell-off knocked prices hard last week.

Goldman said it was cutting its average price forecast by $3.50 to $69 a barrel, keeping it among the top 10 in a Reuters poll of more than 30 analysts.

“Although some of this warm weather was already embedded in our price forecasts, the weather deviation since mid-December … through first part of January will likely reduce oil demand by a further 46 million barrels relative to our prior assumption of normal weather, which would be worth approximately $3.70 a barrel to the oil price,” it said in a report dated Jan. 5.

Goldman, whose 2007 forecast was the industry’s most bullish at the middle of last year, first cut its forecast for this year by $3 on Dec. 22, citing unexpectedly high U.S. oil inventories.

Reuters