(Updates with detail)
LONDON Oct 30 Crude oil prices are ripe for some
"tactical" profit-taking after their recent rally to record
highs, investment bank Goldman Sachs said on Tuesday, as it
recomended closing long positions in oil, agriculture and gold.
"We...are closing our long WTI and long agriculture and gold
positions. We are not trying to call a top here, just take
profits from a tactical perspective, as prices could continue to
rise in the coming weeks," Goldman said in a research note.
The bank said oil prices could rise above $100 a barrel as
key upside risks such as cold winter weather exacerbating supply
shortages, a U.S. Federal Reserve rate cut, weak dollar, rising
costs and royalties and ongoing geopolitical turmoilremained.
However, the risk picture was now becoming more balanced as
downside risks were gaining momentum, it said.
These include increasing Middle Eastern and West African oil
exports, a slowing U.S. economy, adequate heating oil
inventories, the end of field maintenance in the Gulf and the
potential for declines in Chinese refinery runs due to price
caps that have squeezed margins.
U.S. WTI NYMEX crude hit a new record high of $93.80 on
The bank, which kept its end of first quarter 2008 oil price
target of $80, said the recent oil rally was underpinned by
fundamental factors and was not the result of increased
"In fact, speculative money is at the same level it was in
August when we were at $72 a barrel and, more importantly, this
rally was accompanied by a decline in open interest, not a rise,
which would have indicated new buying as opposed to short
covering," it said.
Goldman said the factors that propelled higher were the same
driving gold and biofuel-related oil seeds prices higher as it
recommended profit taking in these commodities.
"It is important to emphasize that we remain longer-term
positive on oil, agriculture and gold and would view price dips
as opportunities to re-establish long positions," it said.