A colder-than-normal winter could push oil prices to $90 per barrel, according to a report published Monday by Goldman Sachs. Market attention has recently been devoted to the potential impact of a US-centered economic slowdown on oil demand growth and, in turn, the potential negative impact on oil prices, but according to Goldman Sachs a bigger risk is weather.

“We continue to believe that a stronger-than-expected economic slowdown in the world economy poses a downside risk to our price forecast,” said Goldman Sachs, but stressing, “However, it is important to emphasize that winter weather represents a far more important risk factor that can substantially impact oil prices both to the upside as well as to downside.”

Specifically, Goldman Sachs said the difference between a cold and a warm winter could result in a more than $16/bbl swing in oil prices, $8/bbl above or below its current $85/bbl forecast for year end.

Goldman Sachs said its base-case forecast for OECD oil demand growth this winter of 700 thousand b/d solely reflects the assumption of a return to normal weather, as demand growth that would have been expected given forecasts for modest economic growth will likely be entirely offset by the negative impact on demand growth from moderate oil price inflation.

"A repeat of last year’s 10 percent warmer-than-normal weather in the northern hemisphere during 4Q2007 would wipe out this demand growth, with the resulting impact on inventories leaving prices closer to $77/bbl by year end. In contrast, an equally 10 percent colder-than-normal 4Q2007 would bring our forecast to over $93/bbl," said Goldman Sachs.