Crude oil fell for a second day, extending its decline from Monday's record, after Goldman Sachs Group Inc., the bank that said in July oil may reach $95 a barrel, told clients it's ``time to take profits.''
Goldman said in a report it was closing its long position in New York oil futures. Long positions are bets that prices will rise. A U.S. Department of Energy report today may say crude stockpiles gained, according to a Bloomberg News survey.
``We're very nervous across the board. Given the fundamentals at the moment oil is still far too high,'' said Jonathan Barratt, managing director of Commodity Broking services in Sydney. ``We've got the important data out later and the market is going to be focused on that.''
Crude oil for December fell as much as 82 cents, or 0.9 percent, to $89.56 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $90 at 8:20 a.m. Singapore time.
Yesterday, the contract dropped $3.15, or 3.4 percent, to settle at $90.38, the biggest one-day drop since Aug. 6. Futures are down 4.1 percent from a record $93.80 reached on Oct. 29.
Oil has gained 47 percent this year as hedge funds and other large speculators increased bets on rising prices. Net- long positions in New York crude futures in the week ended Aug. 3 jumped to the highest in more than a decade.
``The downside risks we have embedded in our end-of-first- quarter 2008 oil price target of $80 a barrel are beginning to gain momentum,'' Goldman said. ``These include increasing exports, a slowing U.S. economy, an adequate level of heating oil inventories.''
A U.S. Energy Department report today is expected to say that crude-oil stockpiles rose 400,000 barrels last week, according to the median of 16 responses in the survey. The report may show that stockpiles of distillate fuel, a category that includes heating oil and diesel, dropped 1 million barrels,
the survey forecasts.
``Stockpiles are still 5 to 7 percent above five-year averages,'' Commodity Broking's Barratt said. Oil may fall to $75 by the end of the year, he said.
Oil price and MCAD is showing divergence, indicating that price will be falling soon.