Commodities Will Increase, Says Goldman Sachs

Written By Brianna Panzica

Posted July 7, 2011

It’s all speculation over the future of the commodities market.

But Goldman Sachs Group (NYSE: GS) is predicting a significant upturn.

And they’re particularly bullish when it comes to crude oil.

According to Goldman Sachs officials, as they reported in May, Brent crude at the end of 2011 could be as high as $120 a barrel and as high as $140 a barrel at the end of 2012.

The global economy, they believe, is on the rise, recovering despite the Japanese earthquake and the high oil prices this past spring.

According to Bloomberg, the Federal Reserve believes the U.S. economy will grow between 2.7% and 2.9% this year.

As the economy recovers, so will demand rates, a problem when there are limited supplies.

A rise in demand will push up commodity prices.

And as Goldman Sachs believes, this will be fueled by the fact that Saudi Arabia won’t be able to meet oil demand.

Despite claims by analysts and even OPEC that Saudi Arabia will be able to increase output to meet growing market demand, Goldman believes that the Saudis have reached their peak oil output.

This stems from circumstances in 2008, when oil surpassed $100 a barrel.

This was plenty of reason to boost market supply, but Saudi Arabia hit its peak at 9.5 million barrels a day, according to the Wall Street Journal.

Now, despite claims by the IEA that Saudi Arabia has the potential for a 12 million barrel-a-day capacity, Goldman has estimated a shortage in supply.

And oil is not the only commodity they see rising in the future.

Prices for U.S. natural gas could also see a significant increase as coal plants die out and demand increases against supply, the banking company believes.

Gold futures will rise as well, and copper prices are due to increase as demand in China does.

The solution? Goldman suggests going long on certain stocks.

Expect Brent crude to rise, as well as copper, zinc, gold, and even soybeans, the Wall Street Journal reports by way of Goldman’s recommendations.

On Thursday, after this prediction was announced, U.S. crude oil futures rose to $97.65 a barrel, a $1 increase, Reuters reports.

That’s all for now,


Angel Publishing Investor Club Discord - Chat Now

Hydrogen Fuel Cells: The Downfall of Tesla?

Lithium has been the front-runner in the battery technology market for years, but that is all coming to an end. Elon Musk is against them, but Jeff Bezos is investing heavily in them. Hydrogen Fuel Cells will turn the battery market upside down and we've discovered a tiny company that is going to make it happen...

Sign up to receive your free report. After signing up, you'll begin receiving the Energy and Capital e-letter daily.