Oil Forecasted to $85 a Barrel by the End of 2009

U.S investment bank Goldman Sachs has forecast crude oil prices to rise to $85 a barrel by the end of 2009, a rise over today’s $67 a barrel. CNN Money article here.

U.S. crude for July delivery rose 69 cents to $66.81, after reaching as high as $67.38 earlier in the session.

Further support for oil prices came from a weaker U.S. dollar, which can boost the appeal of oil and other commodities as a hedge against inflation.

“For the better or for the worse, a switch in the Goldman price forecast rarely does not have a price influence and we will need to take it as a market input for the next few days,” said Petromatrix analyst Olivier Jakob.

Goldman Sachs (GS, Fortune 500) raised its end of 2009 oil price forecast to $85 a barrel from $65 and introduced a new end of 2010 forecast of $95.

“The recent rally in WTI (U.S. crude) prices is likely to be but the first stage in the oil price rally that we expect will accompany a recovery in economic activity,” Goldman said in a research note.

Oil closed down more than $2 on Wednesday following a report by the U.S. Energy Information Administration that U.S. crude inventories rose 2.9 million barrels, against expectations for a decline of 1.4 million barrels in a Reuters poll.