Goldman Expects $130 Oil in 2012

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Goldman Sachs is not backing off their oil price estimates. They believe demand from emerging markets will offset stagnation in the developed economies.

Goldman said the emerging economies of the BRICS nations, Brazil, Russia, India, China and South Africa are expected to grow by +7.7% in 2011 and +7.9% in 2012. The developed economies are expected to grow only +1.7% in 2011 and +2.1% in 2012.

They expect the increased consumption by the BRICS to push the price of Brent to $130 from its current $112. Brent is the benchmark for all water borne crude. U.S. refineries pay prices indexed to Brent if they are forced to refine crude bought from outside the USA. WTI crude prices are only applicable to crude sold inside the continental USA.

However, WTI is predicted to reach $126.50 over the same period according to the Goldman analyst. It is currently $88.

If growth in the U.S. were to accelerate the price could go materially higher. Demand growth in China is expected to increase by 9.2% in 2012 and by more than +8% in the rest of the BRICS.

Goldman also expects copper to increase to $11,000 per metric ton. Prices rallied to $10,190 in February and were trading at $8,660 on Sept-15th.

Last year China consumed 45% of the world's steel, 76% of iron ore, 41% aluminum and 39% copper.

They predict a coordinated rescue of Greece could boost the EU economies and increase global demand for all commodities.