Goldman Says Oil "Substantially Higher" By 2012

Goldman Sachs GS is forecasting "substantially higher" oil prices by 2012 as stockpiles dwindle and excess capacity is pared. The bank said global economic growth will boost demand, paring inventories in the process. Goldman added that OPEC's spare capacity will shrink as the cartel is forced to pump more oil to meet demand. Oil prices have surged 7% this month, catching a bid thanks to the Federal Reserve's quantitative easing sequel. Oil futures touched their highest levels in two years on Monday. U.S. crude inventories plunged 7.4 million barrels last week, the biggest drop since September 2008, Bloomberg News reported, citing the American Petroleum Institute. In its note, Goldman said oil, along with copper, zinc, gold, platinum and corn offer the best upside potential among various commodities over the next year.