Goldman Sees Further Dip in Oil and Metals Prices

Over on Metal Miner, a Spend Matters affiliate blog, a recent post suggests that we could see further declines in metal prices over the coming months. According to Metal Miner, "Usually one of the more bullish proponents of the commodities super cycle, Goldman Sachs have released today their most bearish predictions for the metals markets to date … The firm that exited the CDW market 3-6 months before the market collapsed and with one of the most extensive (and successful) analyst teams on Wall Street has dramatically downgraded its predictions for oil and metals in the face of unprecedented economic turmoil."

Specifically, Goldman downgraded oil to $70 barrel by year-end "with the potential to drop to $50/barrel if the financial and economic crisis worsens." The post also suggests that such a significant drop in price "combined with very restricted credit availability" could lead producers to sharply curtail production that could lead to potential supply disruptions. To me, this sounds like a silver cloud with a potentially dark lining. Above all, it suggests that companies should take a long and hard look at their commodities spend with an eye not only to reduce costs, but to shore up global supply over the coming months and years.

- Jason Busch

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