UPDATE 1-Goldman sees massive upside risk in oil prices
Short of a conflict, an EU embargo on Iranian oil would likely to be neutral for the market because Chinese government reserves would likely absorb excess oil, Currie added.
Excess demand in the market would lead to another drawdown in oil inventories this year, although a more modest one than in 2011.
The most recent weekly U.S. data suggests that a downward trend for global inventories was reestablished in December, he said.
Despite softer Chinese economic growth, demand for oil has continued to be resilient and China is due to overtake the United States as the world's biggest oil importer within 18 months, Currie added.
LONDON Jan 9 (Reuters) - Oil, gold and base metals are Goldman Sachs' top commodity picks this year, with big upside risk in oil due to tight fundamentals and a potential Iranian conflict, the investment bank said on Monday.
Price increases in Brent crude already in the first weeks of the year mean Goldman's end-year target is only 13 percent away, but it is the commodity with the greatest potential to break above its target, Head of Commodities Research Jeff Currie said.
"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.
Goldman expects Brent oil to end the year at $127.50 per barrel and trade at an average of $120 in 2012.
Bob
full report - http://af.reuters.com/article/metalsNews/idAFL6E8C93AU20120109
SSN Price at posting:
11.5¢ Sentiment: LT Buy Disclosure: Held
