Brent crude futures, the international benchmark, should continue to show backwardation, a trend where near-term contracts are priced higher and future-dated contracts decline, the analysts said.
Meanwhile, "substantial pipeline de-bottlenecking" in North America during the second quarter should support West Texas Intermediate prices in the second and third quarter, they wrote.
They expect oil to see a three-month return of six percent, with risks to the upside due to geopolitical risks and a better economic backdrop in the second half.
Read More: (Goldman Leads Wall Street Commodity Decline)
They have a 12-month price forecast of $97 per barrel on West Texas Intermediate crude. They expect inventories of U.S. crude in Cushing, Okla. to build up again in March when refineries go into maintenance but Cushing should see a deficit in the second quarter as refineries start up and new pipeline capacity between the Permian basin oil fields in Texas and Oklahoma, and the Gulf Coast refineries opens up.
This development should narrow the spread between Brent and WTI, which they expect to average around $7.50 a barrel in the second quarter, they forecast. The spread is currently about $19 per barrel.
Their 12-month target on Brent is $105 per barrel. Brent peaked at $119 in February before declining to about $110 per barrel. Weak U.S. demand data in late February helped drive the selloff even as equities rose. Goldman analysts said even though U.S. government data shows elevated crude stocks, it is largely from the natural gas liquids and other petroleum products resulting from the shale boom in the U.S. and they see the global inventories near last year's critically low levels.
(Read More: Brent Undermined by Chinese Growth Fears)
The analysts expect copper prices to move higher because of strength in Chinese construction completions. They expect to see copper move from the low of $7,718 per ton in the September 2013 LME contract March 1 to $9,000 in six months. Their 12-month forecast remains $8,000, due to improved supply growth.
Gold is another story. Goldman expects gold to rise before it falls, becoming a straight-out short. Gold was at $1,578 an ounce on the Nymex Monday, and the analysts expect to see it hit $1,615 an ounce before heading south. Their 12-month target is $1,550.
Gold has declined the most in the commodities selloff and it has "exposed a quickly waning conviction in holding gold positions, especially ETFs," they wrote.
