Pro-Commodities Goldman Turns Bearish, Warns on $50 Oil

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"We have underestimated the depth and duration of the global financial crisis and its implications on economic growth and commodity demand," its commodity markets research team lead by Jeffrey Currie said in a report dated Oct. 13.

Goldman Sachs, one of the foremost bulls on commodities, turned a near-term bear on Monday after conceding that global financial turmoil would take a far bigger toll on demand than first anticipated.

"We have underestimated the depth and duration of the global financial crisis and its implications on economic growth and commodity demand," its commodity markets research team lead by Jeffrey Currie said in a report dated Oct. 13. The bank, which has consistently been at the top of Reuters oil price polls for years, said in the report that it now expects U.S. crude oil prices to end the year at around $70 a barrel, down from a previous forecast of $115 a barrel.

"However, should the financial and evolving economic crisis cut deeper into demand, the market could fall as low as $50, which we believe to be the industry's cash cost and shut in level," the analysts wrote.

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