US crude prices to drop again to US$40 as crude inventories rise: Goldman Sachs

SINGAPORE (Reuters) - Oil prices will reverse their recent rises as global crude inventories begin to increase again, with a return of US$40 a barrel for US WTI crude likely in the near-term, Goldman Sachs said.

Oil prices rose by almost a third between January and February on the back of Middle East supply disruptions, strong winter demand and high refinery margins.

The climb followed a rout that had seen price falls of around 60 per cent between June 2014 and January this year. But Goldman said that "the activity pull is sequentially weakening" and that global crude inventories would therefore rise, pulling WTI to US$40 a barrel, levels last seen during the peak of the global financial crisis in late 2008, early 2009.

The bank said that Brent prices would therefore also come under renewed downward pressure.

"As a result and absent further unexpected OPEC disruptions, we expect Brent oil prices and timespreads to reverse their recent strength, although the lack of a meaningful build in the past few months leaves risk to our forecast for (WTI) oil prices remaining at US$40/barrel for two quarters skewed to the upside," the bank said in a note dated March 8.