NEW YORK (Jan 28): Goldman Sachs Group has downgraded its three-month commodity outlook to underweight as mounting global supply gluts sent energy and metals prices tumbling this year.

There is a greater risk that raw material prices may drop in the near term than rise, Goldman strategists and analysts including Christian Mueller-Glissmann, Peter Oppenheimer and Jeffrey Currie wrote in a research report.

The Bloomberg Commodity Index of 22 components reached a 12-year low this week, with crude oil, hogs and copper leading losses in 2015.

Inventories of grains, metals and energy are rising after a decade-long bull market for commodities spurred miners, drillers and farmers to increase production.

Falling oil prices are threatening to prolong the rout as they make it cheaper to produce more, worsening the oversupply that triggered the slump.

West Texas Intermediate for March delivery rose 2.4 percent to settle at US$46.23 a barrel on Jan 27 on the New York Mercantile Exchange. Prices are down 13 percent this year after a plunge of 46 percent in 2014.

Goldman expects crude futures in New York to trade near US$40 a barrel for most of the first half of this year, the analysts said.

Slowing supply growth and a balancing global oil market by 2016 means prices will move toward the marginal cost of production, or US$65, the bank said.

The analysts upgraded their 12-month commodity outlook to overweight.