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Goldman Sachs: Oil Supplies Seen Tighter In Coming Months

LONDON -(Dow Jones)- Goldman Sachs (GS) Tuesday forecast oil supplies would tighten in the coming months as the global economy rebounds from a severe slowdown.

"We continue to expect generally positive OECD economic indicators will boost oil demand in the developed economies, reinforcing strong emerging market demand," Goldman analysts said in a report.

The bank predicted the glut of global oil inventories would dwindle into a deficit over the coming months due to strong Chinese demand for industrial fuels and an anticipated recovery oil consumption from developed economies.

"Robust economic activity [in China] has helped propel oil demand back above pre-recession levels," Goldman said, citing strong Chinese real gross domestic product, industrial output and PMI data as reasons for the rise in Chinese product demand in September.

Goldman maintained its year-end West Texas Intermediate crude oil price forecast at $85 a barrel. It also kept its forecast for a $95 a barrel WTI crude by the end of 2010, on an expected improvement in demand, lower spare OPEC production capacity and declining non-OPEC production.

-By Lananh Nguyen, Dow Jones Newswires; +44 (0)20-7842-9479; lananh.nguyen@ dowjones.com

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