Friday, April 2, 2010

Volatile oil prices are back says Goldman

Business Week takes on a Bloomberg report:

March 31 (Bloomberg) -- Commodities are set for “violent price spikes” as constraints on investment in new supplies and emerging market demand lead to shortages, according to Goldman Sachs Group Inc.

Volatility in prices is driven by limits in the production and storage of commodities, rather than by financial investors, the bank said in an e-mailed report.

“Commodity markets have faced a growing physical imbalance over the last several years resulting from a lack of investment in underlying production, distribution and storage infrastructure,” Goldman analysts said in the report. ‘Not just rising price levels, but violent price spikes likely lie ahead for much of the commodity complex.”

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