Goldman Sachs fell into line with other banks on Tuesday as it cut its 2012 Brent crude and copper price forecasts, on growing worries that the European financial crisis would restrain economic growth and curb global fuel demand.

The US investment bank, known by some of its competitors as a 'perma-bull' for its relatively high commodity price forecasts, trimmed its 2012 Brent price estimate to $120 a barrel from $130 and cut its forecast for US light crude, also known as WTI, to $109 from $123.50.

Goldman Sachs had the highest Brent 2012 forecast of $130 a barrel in the latest Reuters monthly oil poll, well above an average of $106.8 a barrel next year.

It is now in line with forecasts by other banks, including UniCredit, and below forecasts from ANZ Bank and CIBC.

'The market continues to focus on the risk of a new economic recession, triggered by the stress on the European financial and banking system,' Goldman Sachs analysts wrote in a note. 'We expect the financial stress in Europe will continue to present headwinds to economic and oil demand growth next year.'     

A growing number of analysts have trimmed their oil price forecasts over the last three months amid growing concerns about the economic outlook and the European debt crisis.

According to Reuters columnist John Kemp, Goldman Sachs analysts were the most accurate price forecasters for 2011.

Despite the cut in price expectations, Goldman Sachs noted the market has recently seen heavy destocking ahead of a potential crisis.

'If a crisis does not occur, the oil market risks running into pressing supply constraints, requiring sharply higher prices to force demand in line with supplies,' the bank said. 

The bank also lowered its 2012 copper price forecasts to $9,200 a tonne from $10,790, as Goldman economists cut their outlook for 2012 global GDP growth to 3.5 percent from 4.3 percent.

"Escalating concerns about recent macro deterioration and the European sovereign debt problems have led to a sharp sell-off in base metals and in copper in particular," the analysts said in a note.

However, Goldman Sachs sees substantial upside to prices from their current depressed levels and recommended taking long positions in copper.

"The speed and magnitude of the copper sell-off suggests an accumulating short position in the market. Further, a potentially powerful upside catalyst lies ahead in China should policymakers shift to an easier stance and/or should lower prices entice Chinese buyers back into the market."     

On the precious metals front, Goldman Sachs saw further upside to gold prices this year and next amid the current low levels of US real interest rates, and kept its 12-month gold price target of $1,860 per ounce. - Reuters