Goldman Sachs Signals End of Oil Price Rises

Source: Guardian, Tom Bawden  (4/13/11)

"IEA warns crude is now so expensive it's hitting the global economy."


The world's biggest commodity trader called the top of the market for crude and a range of other commodities—at least for the time being.

Goldman Sachs advised its clients to sell their investments in oil, copper, platinum and cotton, arguing that record levels of speculative trading in crude have pushed their prices up so much in recent months that "in the near term, risk-reward no longer favors" holding those commodities.

After a 25% rise in the value of the CCCP basket (comprising crude oil, copper, cotton, soya beans and platinum) in four months, investors' best bet is to quit while they are ahead, the bank said.

Goldman has a huge influence in the market and the bank's recommendation was backed up by another influential player. The International Energy Agency (IEA) warned that crude was now so expensive that it was hitting the global economy, reducing the demand for oil and, in turn, other commodities. This is likely to result in a "less palatable route to price moderation," the IEA said.