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Oil is starting the week off trading a little lower today, but Goldman Sachs (NYSE: GS) is looking for oil prices to continue to move higher, and expects to see $150 much sooner than previously thought.While speaking today at a conference in Malaysian's capital, Kuala Lumpur, Jeffrey Currie stated that the possibility that we were going to see $150 oil was real, and that he believed that we would hit that time sometime this summer. Goldman has been bullish on oil prices for some time now, and last month went so far as to state that we would be seeing $200 oil at some point within the next two years.
While $150 oil may sound insane, it really is not that big of a difference from where we are now. Today prices have retreated a bit back down to around $136.25, but Friday they were close to breaking through the $140 mark, after trading up more than $11 and hitting a high on of $139.12. All it would really take is just one or two more days like that to make $150 oil a reality.
For the past year the main argument that we have been hearing is that oil prices have basically been soaring in reaction to the weak U.S. dollar, and that supplies were more than adequate, but Goldman seems to be thinking that may not actually be the case after all. The state that while it is true that demand has been weaker than expected, the supply is also weak at this time. They point to two main countries... Russia and Nigeria for examples of locations were supplies are not at the levels we would expect to be seeing. Add of top of that the possibility for some serious trouble on the horizon in Iran and supplies could really move lower pretty fast.
Morgan Stanley (NYSE: MS) stated on Friday that we should expect to see $150 oil by July 4.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.
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Reader Comments (Page 1 of 1)
6-09-2008 @ 3:26PM
F. W. Applegate said...
Hooray Goldman Sachs, but next time hit the panic button a little hatder...We love pain!
6-09-2008 @ 3:37PM
Michael Schneider said...
$150 oil isn't that far from where we are now but some consumers and businesses will feel an impact of the move greater than the price rise-- when you have only so much money for energy and it keeps going up there is a point at which it starts to have a real impact on your living standard and the ability of some businesses to survive or thrive.
Arjun Murti, the analyst at Goldman Sachs who made the call on oil going to $150-$200 noted in Barron's that part of the supply problem is that producers are getting plenty of cash for their oil so they have no incentive to go to great lengths to produce more. (Ironically, that suggests to me that we might have been able to avoid the predicament we are in now if policymakers had had the foresight to raise the gas tax- as Barrelomoney has been recommending-- to curb demand and lower the price. Had that happened, lower prices might have encouraged producers to find ways to bring out more oil and consumers would be paying less at the pump while more of what they paid could have been going to pay off the deficit-- it sounds backward by Econ 101 standards but if Murti is right high prices are discouraging production in this situation!).
In any case, a synopsis of a good profile of Arjun Murti is available free in the Spotlight section at http://www.Barrelomoney.com. Also, you could add Mexico to the list of oil producers who are set to do worse than expected- an item on Mexico's vanishing oil profits is in the Oil Alerts section (left side, light blue label) at http://www.Barrelomoney.com.
6-09-2008 @ 3:41PM
Mike Lewis said...
This is destroying the trucking industry.
6-09-2008 @ 3:45PM
Paul said...
Thanks Goldman Sachs... Thanks for the manipulation, and speculation that has basicly brought a great and wonderful place to its knees... I hope the fleas from a thousand camels infest your arm pits and flea spray cost a billion dollars a barrel...
6-09-2008 @ 4:33PM
Dan Barnett said...
Another problem we have with oil is that the mere rumor of the Terrorists of Outer Bezerkerstan (or is that the Freedom Fighters of Inner Bezerkerstan?) attacking the production facilities/pipelines/storage facilities, will send prices soaring.
6-09-2008 @ 4:49PM
Mark said...
Almost everyone here is to blame for the high gas prices. Oil futures are traded on wall street and that regulates the prices (same as stocks) Most of you may have a portfolio with oil companies in it or an insurance company etc that has that in there portfolio . Wake up tell your brokers to DUMP your oil portfolio and e-mail all the people you do buisness with telling them to do the same or you will noy buy from them. Trust me if enough people did this oil would drop very quickly to the $2 Range again
8-13-2008 @ 7:21AM
stefan said...
Did he also predict that oil would first rise 147 dollars and then drop tot 112 dollars a barrel in the first week of august 2008
If he had told me that, at least I could have waited till august.Can he tell me how low it wil gobefore reaching 150