Goldman sees risk of oil prices gaining amid OPEC supply losses

Goldman Sachs Group Inc. said price risks for Brent crude in the second half of the year have changed “to the upside” amid production losses in some OPEC nations and political threats to supply, Bloomberg reported.

Reductions in output from Libya, Iraq and Nigeria have the potential to limit availability, the bank said today in an e-mailed report. Even so, increased production outside the Organization of Petroleum Exporting Countries will probably keep global markets adequately supplied this year, said Goldman, which forecasts Brent crude to average $105 a barrel in the second half. Brent futures traded at about $108 a barrel in London today.

“The risks have shifted more to the upside over the short term due to the possibility of continuing OPEC production shortfalls and increased geopolitical risks,” Jeff Currie, the head of commodities research in New York, said in the report.

OPEC output fell by 370,000 barrels a day in June amid unrest and violence in Libya, Iraq and Nigeria, the International Energy Agency said in its most recent monthly market report on July 11. The losses come just as increasing seasonal demand for motor fuels is pushing up global oil consumption, Goldman said. OPEC supplies about 40 per cent of the world’s crude.