60 million barrels of oil next month

As the International Energy Agency announced the release of 60 million barrels of oil next month to shore up the economic recovery, J.P. Morgan and Goldman Sachs slashed forecasts for crude prices in the third quarter.

J.P. Morgan cut its average forecast for Brent crude to $100 a barrel in the third quarter, down from its previous projection of $130. Goldman Sachs , one of the most influential banks in commodities, expects Brent prices to fall to $105-$107 a barrel by the end of July.

The 60 million-barrel sale over 30 days is a sufficient volume to cause a very substantial drop in the oil price.

Oil bounced back a dollar on Friday after tumbling to a four-month low in the previous session on news the world’s top consumers planned to release emergency oil reserves for only the third time ever.

In a note to clients, Goldman’s energy team, led by David Greely in New York, said, “We estimate that a 60 million barrel release by the end of July has the potential to reduce our three-month Brent crude oil price target by $10-$12 a barrel, to $105-$107 a barrel. We would expect the release to have less of an impact on prices further out the curve, as the oil would be absorbed to meet current demand. Net, we would expect that the potential impact on Brent crude oil prices in 2012 to be closer to $5-$7 a barrel on average.”

Goldman is a long-term bull on oil and has said the 2008 peak of more than $147 a barrel could be surpassed in the coming years.

Business Editor

60 million barrels of oil next month
by ( Author at Spirit India )
Posted on at 7:46 pm.
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