Goldman Sees Oil Somewhere Between $150 and $200 a Barrel within Two Years
Bloomberg is reporting this morning that a team of analysts at Goldman Sachs Group, Inc, led by Arjun N. Murti, is forecasting that the price of crude oil may rise to somewhere between $150 and $200 USD within 24 months as supply is continuing to lag behind demand.
Oil is currently selling at approximately $121 per barrel as I type this. Sales of pickup trucks and SUVs have fallen off a cliff at current gasoline prices and if oil were to increase, say, another 50% in price to approximately $180 per barrel within two years, it would cause considerable mayhem in the auto industry. Forget SUVs and pickups; sales of crossovers and large cars would also experience considerable deterioration in the marketplace.
“The possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the upcycle remains a major uncertainty,” the Goldman analysts wrote in the report dated yesterday, May 5.
The short version of the Goldman report is this: Demand from China, India, Middle East, Russia and other developing economies is going to continue increasing, and oil supplies will probably remain static or decrease. Addressing the current popular and political sentiment against oil speculators, the Goldman analysts concluded, “There’s a fundamental misperception that so-called speculators are driving prices to unjustified levels, the research analysts said. “Unfortunately, we do not think the energy crisis will be solved by finding and punishing the big bad speculator.”
Even more worrisome than the spectre of ever-rising oil prices is the potential scenario put forth by the Goldman analysts of a so-called “super-spike” in the oil commodities market that would suddenly drive oil prices upward quickly within a very short time frame. This type of dramatic price correction would really damage consumer confidence overall, and for the auto industry, would put a dagger into new vehicle sales for at least a couple of quarters.
You can read the whole Bloomberg article .
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