Sunday, March 9, 2008

Well, well, well – this WILL be interesting

New 'super-spike' might mean $200 a barrel oil

With $100-a-barrel here for now, Goldman Sachs says $200 a barrel could be a reality in the not-too-distant future in the case of a "major disruption." Goldman on Friday also boosted by $10 the low end of its 2008-2012 projected range for crude to $60 a barrel -- significantly lower than current prices, to be sure, but a possible mark for oil if "normalized" trends return to the marketplace. With the dollar's fall continuing and financial markets roiled by the credit crunch, commodities like oil have been drawing the fancy of increasing numbers of investors. Accordingly, Wall Street firms have been eager to adjust forecasts to incorporate fresh data on the global economy and energy supplies.

Posted by lvmreader @ 05:18 PM (891 views)
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12 thoughts on “Well, well, well – this WILL be interesting

  • happyrenterz says:

    I doubt that $200 oil will happen for a few years. The biggest users of oil, USA, are going into recession. The rest of the world will slow as well. When that recession ends, yes $200 oil will be here to stay. So their lower estimate of $60 a barrel for the next year is more likely in my opinion.

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  • I disagree. Technical factors, not supply fundamentals, have been holding the price of oil down. As Hedge Funds sell oil to meet margin calls, the price is restrained somewhat. Even if the geopolitical situation was not as messed up as it is (Saudi Arabia promising to rebuild all Palestinian homes – a veritable blank cheque), we should expect oil at around $120 / barrell (WTI) by H2 2008.

    Remember, the fuel protests in Europe happened when oil was at $25 / barrel.

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  • happyrenterz says:

    Not sure what you mean. Already less oil is being used in the USA than 12 months ago yet the price is almost double!
    see http://www.usnews.com/blogs/beyond-the-barrel/2008/3/4/oil-demand-is-dropping-but-prices-arent.html

    “Falling demand for overall petroleum products, which was down 3.4 percent over the last four weeks compared to the same time last year, suggest prices could drop steeply once the dollar-driven oil investment frenzy runs out of steam, analysts said.”
    http://www.marketoracle.co.uk/Article3940.html

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  • sold 2 rent 1 says:

    Oil could hit 200 by 2012 just on US money supply growth alone.
    US M3 growth is 18pc which means a doubling rate of 4 years

    As the economy is on the edge of hyperinflation or deflationary depression, US M3 growth holds the key to which one.

    If M3 crashes down to below zero then it is deflation. Oil will crash too.
    If it goes up to 30 to 40pc then it is deflation.Oil will double in price.

    Peak oil is the unknown. If it is true then oil could hit 200 whilst M3 is collapsing, which would be dire

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  • sold 2 rent 1 says:

    correction

    If it goes up to 30 to 40pc then it is inflation.Oil will double in price.

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  • sold 2 rent 1 says:

    Incidently, Alex Jones thinks peak oil is a myth, put out by the power elite.
    Not sure how this can be, seeing as most people have not heard of peak oil.

    If the mainstrem press start pushing peak oil, then is it for real or is it propaganda? This really is beginning to be like 1984

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  • Demand comes often more from speculators than from the actual users. People stockpile commodities in times of uncertainty. The USA is not the only user of oil.

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  • Goldman Sach predicted a “super-spike” of oil $100, and guess what crude is $105. Those guys are good aren’t they. Better than mystic meg.

    http://news.bbc.co.uk/1/hi/business/4399537.stm

    Now $200, history is a wonderful thing.

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  • happyrenterz says:

    I think Bernanke has got it right, inflation is not the main threat. There is a massive deflation of the housing and “shadow banking system” happening. There will be a deflationary depression. From the market oracle article above.

    “Roach notes that the recession of 2000 to 2001 was a collapse of business spending which only represented a 13% of GDP. Compare that to the current recession which “has been set off by the simultaneous bursting of property and credit bubbles…. Those two economic sectors collectively peaked at 78 percent of gross domestic product, or fully six times the share of the sector that pushed the country into recession seven years ago.””

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  • stillthinking says:

    Isn’t oil being treated literally as black gold and being used as an inflation hedge? I thought that oil was being bought not for use, but for later sale.

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  • While the USA may use a little less oil due to recession, the developing world has a rapidly growing appetite, and there is little evidence that rising prices are having more than a modest impact on overall demand.

    While higher prices are making many marginal fields look economic to exploit, there is a significant timelag before a decision to exploit translates into extra product on the market, and at the moment, there is very little margin between output capacity and demand.

    If there was nowv a serious disruption in one of the major producing countries, there could arise an absolute shortage for a while, in which event $200 would not be that surprising.

    In the absence of an upset however, I would expect prices to settle back a little, but perhaps not as low as $60. Thereafter, I would expect the price to track the Chinese Yuan rather more closely than it does the US dollar

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  • also sold to rent says:

    200 is a walk in the park. My get out price is 1000 dollars (or whatever it’s priced in by then) some point in the next decade. At that level investment in alternatives will be huge and might really start to diminish demand on oil.

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