Wrong so far
We continue to be wrong about oil, at least so far. WSJ:
Analysts at Goldman Sachs Group are back with a revision to their oil “super-spike” call, originally made in 2005. This time, the target is $150 to $200 a barrel for crude oil, within the next six to 24 months.
Goldman’s group, led by analyst Arjun Murti, says the energy crisis “may be coming to a head.” They cite the lack of supply growth outside of the Oil Production and Exploration Countries, and the struggle for OPEC nations to produce more, as part of what will continue to drive prices higher.
In April of 2005, Mr. Murti’s team said the super-spike in oil could lift prices as high as $105 a barrel, which one analyst then compared to a “Dow 20,000″ call.
Crude’s Yearly Close
Year 12/31 close
2001 $19.84
2002 $31.20
2003 $32.52
2004 $43.45
2005 $61.04
2006 $61.05
2007 $95.98The rapid rise in the last year or so suggests $150 could not be far off, and even $200 does not seem fanciful. Perhaps it’s a sign of the times that such a call has only had a mild effect on futures — oil, of late, was up 36 cents to $120.33 a barrel.
“Will we see $200 in the next 24 months? I think it’s possible,” says Phil Flynn -vice president, senior market analyst, Alaron Trading. “Will we see it in the next six months? It’s possible if we have another hurricane or another disruption…long-term, I think we will see oil hit $200 a barrel.
We continue to observe a lot of demand destruction going on in the US and elsewhere, and suspect that the growth of the BRIC-like countries will slow more markedly than is commonly expected in the face of near recession conditions in much of the developed world. But, hey, what do we know? No much so far, apparently.
May 6th, 2008 at 6:10 pm
Right or wrong, I enjoy your posts about the oil market. I hope Dinocrat continues to post on the topic as events warrant.
May 6th, 2008 at 10:31 pm
We continue to be wrong about oil, at least so far.
Meh. I view your posts as brainstorming (not as polemics or prognostication), and appreciate the thought and insight that go into them. In turn, I try to comment constructively (and hopefully to add value sometimes) whether I agree or disagree.
May 7th, 2008 at 3:07 am
Don’t you mean that a dollar will fall to 2% of a barrel of oil?
May 7th, 2008 at 12:24 pm
Given that our current energy policy is: we have none, what possible limit can there be?
We should be building nuclear plants, not burning food. We should be drilling for the oil we do have in Alaska and off the coast of Florida. We should be funding efforts to gasify coal - the Germans did it during WWII, it is possible.
The longer we do nothing, the worse it will be. This will end. The usual suspects in Congress will hold hearings instead of mirrors.
May 8th, 2008 at 7:08 pm
Even though Glenn Reynolds doesn’t believe his own conjecture, it’s interesting:
(Interesting to me, at least, because a related interpretation has crossed my mind.)