Goldman Sachs: Oil Prices Will Go Higher

Goldman Sachs Group upped its oil (NYSEARCA:USO) price outlook Friday, dismissing the effect of problems between Iran and the west and pointing out a lower risk of contamination from Europe and improving near-term economic developments in China and the U.S.

The U.S. bank raised its forecast 8 percent for West Texas Intermediate crude, to $113 a barrel on a three-month basis, from a previous $104.50 a barrel. It also raised its six-month outlook to $115 a barrel from $113.50 a barrel and its 12-month forecast to $123.50 a barrel from $122.50a barrel. It also gave a 2 percent increase to its Brent crude forecast to $120 a barrel on a three-month basis, from $117.50 a barrel previously, and kept its six- and 12-month forecasts at $120 a barrel and $127.50 a barrel respectively.

Although the European Union is getting ready for more sanctions against Iran, likely to involve an embargo on Iranian crude, Goldman said the crude oil market is not including an “Iran premium” in oil prices. Saudi Arabia is jumping in to fill the supply gap to refiners as they look for alternative oil sources ahead of the coming sanctions, which is putting pressure on timespreads and prices in the physical market, said the bank.

Here’s how top oil and gas companies are reacting to the news:

Exxon Mobil Corp. (NYSE:XOM): XOM shares recently traded at $84.27, down $0.47, or 0.55%. They have traded in a 52-week range of $67.03 to $88.23. Volume today was 5,531,504 shares versus a 3-month average volume of 20,020,500 shares. The company’s trailing P/E is 10.17, while trailing earnings are $8.28 per share.

Chevron Corp. (NYSE:CVX): CVX shares recently traded at $104.88, down $0.09, or 0.09%. They have traded in a 52-week range of $86.68 to $110.99. Volume today was 3,691,841 shares versus a 3-month average volume of 9,165,760 shares. The company’s trailing P/E is 7.77, while trailing earnings are $13.50 per share.

ConocoPhillips (NYSE:COP): COP shares recently traded at $70.47, down $0.29, or 0.41%. They have traded in a 52-week range of $58.65 to $81.80. Volume today was 3,553,197 shares versus a 3-month average volume of 8,155,370 shares. The company’s trailing P/E is 9.04, while trailing earnings are $7.80 per share.

BP plc (NYSE:BP): BP shares recently traded at $43.66, down $0.54, or 1.22%. They have traded in a 52-week range of $33.62 to $49.50. Volume today was 2,270,409 shares versus a 3-month average volume of 6,902,960 shares. The company’s trailing P/E is 6.04, while trailing earnings are $7.22 per share.

To contact the reporter on this story: Gina Smith at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com