Oil Price Surge is an Overreaction: Goldman Sachs

As per Goldman Sachs, the recent sharp rise in oil prices can’t be explained by fundamentals. Goldman Sachs Managing Director and Chief Economist Jim O’Neill said Sunday that oil’s sharp rise Friday “relied on the shock of the comments of the European Central Bank the day before and the renewed weakness of the U.S. dollar.”

European Central Bank President Jean-Claude Trichet has given hints about possible hike of interest rate in the near future. He further said that some members of its governing council favored the move.

As a result of his comment, Dollar is under heavy pressure during “a period when many people thought that maybe oil prices were stabilizing”, O’Neill told Dow Jones Newswires at the sidelines of the St. Petersburg International Economic Forum.

He added that the underlining reason for the high oil prices is a shortage of supply and strong demand from emerging economies. Oil futures were up more than $10 to $138.54 a barrel Friday at the Nymex.

Source: Goldman Sachs

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