CNOOC's oil exploration platforms drilling in Bohai Bay. Bloomberg News

HONG KONG: Goldman Sachs has raised China National Offshore Oil Corp's (CNOOC) price target by 15 percent to HK$13 while maintaining its "buy" recommendation on the oil producer.

The US investment bank's move marked its second upgrade on CNOOC in less than a month even as it forecast crude prices to bottom out soon.

Goldman Sachs also raised its crude oil estimates for this year and next to $59 and $80 per barrel, respectively, from its previous forecasts of $50 and $70.

It said it was of a view that crude prices have touched bottom and that they would switch to an upward trend in the coming months.

Goldman Sachs however said last week that it expects oil prices to average between $50 and $60 this year, given an equilibrium in supply and demand as well as reduced US dollar liquidity.

Earlier last week, CNOOC announced an expansion plan involving the establishment of a large petrochemical base and commercial reserves of both crude and petroleum products in Fujian province.

Meanwhile, Goldman Sachs also noted that the supply structure of crude oil remains unbalanced, and market demand will again be the dominant factor on pricing in the coming years.

Based on the prediction of crude price, Goldman Sachs raised the profit forecasts of Asian oil companies in 2009, 2010 and 2011 by 16 percent, 15 percent and 11 percent, respectively.

It raised China National Petroleum Corporation's (CNPC) target price by 8 percent to HK$9 and it retained its "neutral" call on the company.

Meanwhile, Goldman Sachs has maintained its "buy" call on China Petroleum and Chemical Corporation (Sinopec) but lowered the oil refiner's target price to HK$7.1 from HK$8.25.

It cited for the downgrade the impact on the company's downstream operations of the central government's recent decision to raise petroleum product prices on the mainland.

Price of US Crude Futures climbed to $69.3 Friday.

CNOOC rose 4.7 percent to HK$11.18 after July crude futures settled 4.1 percent higher at $68.81 a barrel on Nymex after Goldman Sachs's announcement.

PetroChina rose 3 percent to HK$9.39.

The Benchmark Hang Seng Index rose 176.76 points, or 1 percent, to 18,679.53.

Analysts said they expect CNOOC to continue its uptrend, while the Hang Seng Index is likely to touch 19,000.

(HK Edition 06/06/2009 page5)