Goldman's U-Turn on Oil

Look who's an oil bear now.

It was just last month that analysts at Goldman Sachs were forecasting oil prices to stay well north of $100 a barrel, even amid signs that the global economy was slowing and that the speculative air was coming out of the rally in commodities.

Today, Goldman cut its year-end forecast to $70 a barrel from $115, MarketWatch reports. "We clearly underestimated the depth and duration of the global financial crisis and its implications on economic growth and commodity demand," analysts wrote in a note to clients.

"Should the financial and economic crisis cut deeper into demand, the market could fall as low as $50 a barrel."

For today, however, oil traders were more bullish, as government bank rescues fostered hopes that there may not not be deep global economic slump that would reduce demand for oil. Crude oil futures surged more than 5 percent, to $82 a barrel.

Goldman's oil forecasts are closely followed, in part because of its bold prediction of $100--a-barrel oil in 2005, when crude was trading at about $50.

And Goldman is a major commodities trader. That part of its business has had bit of hiccup, Reuters reports.

The pricing agency Platts has restricted Goldman from its daily oil trading window, Reuters reports,

"Goldman is the latest in a series of major investment banks to be placed under a so-called "review" by Platts, which has said it may sometimes need to limit the activities of some companies in its half-hour price-discovery process if their acceptability by counterparties threatens to distort benchmark prices."

It does not affect Goldman's ability to trade, but it puts the Wall Street firm under closer scrutiny.

How much things have changed when even Goldman is put under review.