Goldman Sachs calls bottom of market for oil

Goldman Sachs has reversed its bearish call on commodities, urging investors to buy as it expects oil will surge to $130 a barrel in the next 12 months.

The US investment banking giant is advising clients to purchase oil after the commodity saw its sharpest one-day fall on record on 5 May, dropping $12 a barrel in a day, the Financial Times reports.

Goldman Sachs recommended a month ago investors should reduce commodity exposure, saying oil prices had moved ahead of where fundamentals suggested they should be.

However, the bank has now called the bottom of the market, saying in a note to clients the correction in early May presents a good entry point to take long positions in oil and commodities.

Goldman has lifted its oil forecast for Brent crude to $120 by the end of this year, up from $111. It also said copper would rise $11,000 a tonne in 12 months, up from $8,923.

Meanwhile, J.P. Morgan is forecasting Brent crude will hit $120 a barrel this year, and Barclays Capital forecasts $112, according to the FT. 

The US investment bank is also bullish on copper and zinc.

Brent crude is up 1% at $111.19 a barrel while copper front month futures have risen 0.65% at $4.02.