Goldman Expects âSwift, Violentâ Oil Rally After Low Near $30 By Grant Smith Jan. 19 (Bloomberg) -- Goldman Sachs Group Inc. commodity analyst Jeffrey Currie said he expects energy prices to have a âswift and violent reboundâ in the second half of the year after slumping to near $30 a barrel. Oil prices may test the low of $32.40 reached in mid- December before rebounding to $65 by the end of this year, the analyst said. In the short term, âbearish fundamentalsâ will dominate as the support from the conflict in Gaza and Russiaâs gas dispute subsides, Goldman said in report e-mailed today. There is scope for a ânew bull marketâ in oil, Currie said. World oil demand is likely to fall by about 1.6 million barrels a day this year, the Goldman analyst said today at a conference in London. Thatâs bigger than the reduction expected by the International Energy Agency, which last week forecast a drop of about 500,000 barrels a day, or 0.6 percent. âThirty dollar oil reflects the same imbalances that got us to $147 oil,â Currie said at the conference. âThe problems havenât gone away. We still believe the day of reckoning is to come.â Infrastructure constraints throughout the oil industry, from supply to transportation and storage, mean that despite the demand slump, âthis is not 1982-1983 all over again,â Currie said. âThe supply pictureâs radically different, the demand pictureâs radically different.â âThe key difference is that today there are no large-scale next generation projects that are going to save the world,â he added. âCommodity demand is exponentially higher than it was.â New York crude futures for delivery in December, trading near $56 a barrel today, currently cost some $15 a barrel more than March futures, a market situation known as contango, where prices are higher for later delivery. Contango Flatten The contango is likely to flatten as supply cuts by OPEC and other supplier take effect, reducing the availability of oil for immediate delivery, and as producing countries sell futures contracts, Currie said. A recent tactic of using supertankers to store crude oil to take advantage of higher prices later this year is âdifficultâ to profit from and is ânear the end of this processâ anyway, the Goldman analyst said. Traders seeking to exploit this contango structure face the problem of either finding a location willing to harbor their tanker for a prolonged time, difficult for environmental reasons, or else spending part of their profit on fuel to keep the ship in motion. The Organization of Petroleum Exporting Countries started another round of supply cutbacks at the start of this month. The groupâs compliance with its overall efforts to cut production will probably peak at 75 percent, or a reduction of about 3 million barrels a day out of an announced aim of 4.2 million barrels a day, Goldman Sachs said. Canada, North Sea âIf OPEC production cuts turn out to be sufficient, then weâve probably already seen the bottom,â said Currie. Countries outside OPEC, in particular the U.S., Canada and North Sea producers, will restrain output by 600,000 barrels a day, Currie said. Non-OPEC cuts will have a deeper price impact than those by OPEC because they involve an actual reduction in investment, rather than just output, that shutter oilfields for a longer period, he added. In several steps, 10 OPEC members have pledged to reduce production to 24.845 million barrels a day, a cut of 4.2 million barrels a day from Septemberâs level.