Crude Oil Trades Near 11 Week High on Goldman "Crude Too Cheap" Statement

Crude oil traded near an 11 week high in New York as equities rallied around the world and Goldman Sachs Group Inc. said crude prices are too cheap. Oil was at about $79 a barrel before a government report due tomorrow that may show U.S. fuel supplies increased last week. Goldman Sachs said futures prices are “significantly” below the level warranted by “fundamentals,” offering buying opportunities for this year and next.

“We expect an average of $92 next year, so on a longer term horizon prices are too cheap, but not far too cheap,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich AG in Vienna. “Crude faces some resistance around $80 as although fundamentals are slowly improving they’re not yet strong enough.” Crude for September delivery was at $79.28 a barrel, up 30 cents, in electronic trading on the New York Mercantile Exchange at 1:23 p.m. London time. Brent crude for September settlement traded at $77.82 a barrel, up 32 cents, on London’s ICE Futures Europe exchange. Futures rose as high as $79.60 a barrel on July 23, the highest intraday price since May 6.

European stocks rose for a sixth day as UBS AG and Deutsche Bank AG reported earnings that beat estimates and the Basel Committee on Banking Supervision softened some of its proposed capital and liquidity rules. The Stoxx Europe 600 Index gained 0.6 percent to 258.65. Goldman Sachs said in a report yesterday that the balance between supply and demand will continue to tighten in the second half of this year as global economic growth boosts demand, returning inventories to “more normal” levels.....Read the entire article.

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