Goldman Sachs: U.S. crude prices at $109 in 2012

U.S. crude oil futures will hit $109 a barrel in 2012 as new pipelines, rail lines and other infrastructure help relieve bottlenecks at a central gathering hub in Oklahoma and carry more oil from Canada and the northern U.S. to refiners on the Gulf Coast and elsewhere, according to a Goldman Sachs forecast.

The prediction represents a drop from the investment bank’s previous forecast of $123.50 a barrel and reflects the increasingly anxious outlook for the global economic recovery. The bank also trimmed its 2012 Brent price estimate to $120 a barrel from $130 amid growing fears of a European financial crisis.

Still, as U.S. prices rise, the gap will narrow between West Texas Intermediate, the leading U.S. benchmark crude, and Europe-traded Brent, which has at times in the past year traded at nearly $20 a barrel more than WTI, the investment bank said.

The difference in price has widened as rising oil production from the Bakken Shale formation in North Dakota and Canada’s oil sands has poured into the U.S. market and been stranded in massive tank farms in Cushing, Okla., creating a glut and depressing prices.

Meanwhile, Brent prices have soared in response to civil unrest in major oil-exporting countries in the Middle East and northern Africa.

The result has been that WTI has lost its prominence as a global oil benchmark and refiners in the Midwest, fed by Cushing oil, have received a sharp discount on the price of oil.

The spread between WTI and Brent has remained wide even as stockpiles in Cushing have fallen by 11 million barrels from their April highs, Goldman Sachs noted. But that should start to change by mid-year 2012 when new transportation infrastructure comes online that gets more North Dakota and Canadian crude to global markets.

The bank predicts the gap between the two will contract to $16 a barrel within three months, to $13 a barrel in six months and to $6.50 a barrel within a year.

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