This year, top commodity picks for Goldman Sachs are oil, gold, and base metals. The investment bank said on Monday that these picks are selected primarily because of a big upside risk in oil due to tight fundamentals and a potential Iranian conflict.
Head of Commodities Research Jeff Currie said Brent crude is the commodity with the greatest potential to break above its target. “Oil we like the most from a fundamental basis but at $113 a barrel in the current environment is pretty rich,” he told a strategy conference in London.
Brent oil is expected to end the year $127.50 per barrel and trade at an average of $120 in 2012, according to Goldman. Gold and base metals have further to rise from present level to targets of Goldman, but have scant potential above the targets.
“Oil on the other hand, given the current environment, tight fundamentals, the current geo-political situation in Iran, creates massive upside price risk relative to our target,” Currie said.
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