Post by The Goose on Oct 23, 2008 16:07:55 GMT -5
GS was long oil and kept pimping it so it would go higher...
www.markethingych.com/news/story/goldman-sachs-raises-possibility-200/story.aspx?guid={4B702F7F-41F8-45F0-A133-630F12F2C764}
If link doesn't work, here is the article...
New 'super-spike' might mean $200 a barrel oil
Goldman's projections foretell persistent turbulence in energy prices
By Steve Gelsi, Markethingych
Last update: 1:42 p.m. EST March 7, 2008
Comments: 191
NEW YORK (Markethingych) -- 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.
Goldman analysts Arjun Murti, Kevin Koh and Michele della Vigna said prices have advanced more quickly than Goldman had forecast back in 2005, when it predicted a range of $50 to $105 a barrel as part of its "super-spike" oil theory.
"We characterized the upper end of the band as more likely to be driven by geopolitical turmoil and that recession was a key risk to our view," the analysts said. "In fact, oil prices have reached $100 a barrel without extraordinary turmoil, and the U.S. currently appears to be in recession."
Tacking on $15 a barrel to all of its oil estimates, Goldman now sees average selling prices of $95 a barrel for 2008, $105 a barrel for 2009 and $110 a barrel for 2010. The high end of its range is now $135 a barrel -- but Goldman hinted that prices could be headed even higher.
"As the lack of supply growth and price-insulated non-OECD demand suggest a future rebound in U.S. gross domestic product growth or a major oil supply disruption could lead to $150-$200 a barrel oil prices," Goldman said.
While saying it has a bullish long-term outlook, Goldman acknowledged that oil prices could correct from recent highs.
Goldman also reiterated its view that oil prices could fall as normal market conditions return over the next four years.
"The core of our 'super-spike' view is that oil prices will keep rising until demand declines globally on a multiyear basis, resulting in the return of excess capacity and a lower cost structure," Goldman's analysts said. "Given this view, once excess capacity returns, we think prices can move sharply lower."
The analysts reiterated their "attractive" view on the European energy sector, but kept a neutral view on the Russian sector due to costs. It upgraded Transneft and Sibir Energy to neutral from sell after underperformance, and cut Imperial Energy to sell from neutral on capital-spending requirements. End of Story
Steve Gelsi is a reporter for Markethingych in New York. Markethingych London bureau chief Steve Goldstein contributed to this report.
It was written back in March. Oil rocketed to an all time high of 147/barrel in July. And then the bubble hit. Now they say it's going to $80. Already fell below that.
Link...
www.businessweek.com/bwdaily/dnflash/content/sep2008/db2008092_750848.htm?chan=top+news_top+news+index+-+temp_top+story
Article:
Oil at $80 a Barrel?
With energy prices falling despite Hurricane Gustav, traders are talking about the end of a speculative bubble
images.businessweek.com/story/08/600/0902_gulf_oil.jpg
In this Sept. 25, 2005 photo, floodwaters surround storage tanks at an idle oil refinery in Port Arthur, Texas, in the aftermath of Hurricane Rita.
by Moira Herbst
In recent years, energy traders plus an active hurricane season have usually meant one thing for oil: higher prices. Yet with the departure of Hurricane Gustav, a rally for the embattled greenback is overshadowing new storm systems churning away in the Atlantic and showing how the prospect of a choppy U.S. economy is scaring traders far more these days than turbulent weather.
The price of a barrel of the benchmark West Texas Intermediate crude for October delivery dropped nearly $6 on Sept. 2, to settle at $109.71 on the New York Mercantile Exchange (CME). That's the lowest level since early April, and a slide of $37.56 since the record of $147.27 on July 11.
While Gustav appears to have delivered only a glancing blow to oil and gas assets in the Gulf of Mexico, the influence of Mother Nature has waned among traders and investors. The souring U.S. and global economies, alongside a strengthening dollar, are weighing heavily on oil prices, analysts say. In fact, the oil "demand destruction" implied by weak U.S. economic growth currently dwarfs both weather and geopolitical worries in determining oil's price. "If you can't rally with a hurricane up your nose—and 2 million barrels of refining capacity and 96% of your offshore supply under threat—it's hard to see what will cause a rally," says Peter Beutel, a veteran analyst with the energy risk management firm Cameron Hanover.
Back to Reality
Oil prices have slid so far and so fast that the retreat has led analysts to predict further puncturing of what they call a speculative bubble. Many analysts don't see a floor at $100, but rather at levels as low as $70 or $80. "This is start of a fall to $80 crude by the end of the year, maybe as early as September," says Joel Fingerman, principal of FundamentalAnalytics.com, a Chicago-based energy consulting firm.
"Oil prices are dropping because they are inflated," says Fadel Gheit, senior energy analyst for Oppenheimer (OPY). "You cannot sustain an artificial price forever. At the end of the day supply-demand fundamentals will take over."
Oil traders and some analysts have been blaming high oil prices on rising demand from developing economies, but now troubles in the U.S. economy are spreading across the globe. "A few months ago it was all about Chinese demand," says Stephen Schork, an energy consultant in Villanova, Pa., and editor of The Schork Report, a daily energy newsletter. "But a lot of the strength [in oil's price] was hype and hot air."
In addition to a gloomy economic environment and lower demand, a strengthening dollar is also behind oil's recent drop. Since July 15, the dollar has gained 8.5% against the euro. "The rise in the dollar is the best explanation of oil's drop," says Beutel.
Airline Stocks Ascend
While energy companies' stock prices fell on Sept. 2, airline stocks jumped at the prospect of cheaper fuel. Northwest Airlines (NWA) gained 13%, to $11.07. UAL (UAUA), the parent of United Airlines, was up 9.5%, to $12.16, and AMR (AMR), American Airlines' parent, jumped 8.7%, to $11.23. In 2008, airline shares have traded inversely to crude.
Despite the drop in crude prices, the market remains volatile. That's why some analysts say the market could again cede ground on supply and demand, resuming a trek upward. Earlier this year, several investment banks made headlines with reports forecasting a "super-spike" for crude, based on producers' inability to keep pace with soaring demand from China and the Middle East. Goldman Sachs (GS) energy strategist Arjun Murti was among those in that camp; he predicted $200 per barrel in coming months.
Indeed, crude prices could recover if the dollar weakens again or if oil-producing countries trim their output to keep prices high, as some analysts have speculated. OPEC is scheduled to meet on Sept. 9 in Vienna and has indicated it may defend a price of $100 per barrel.
Hanna on the Way
There is also ample meteorological uncertainty. On Tuesday, Tropical Storm Hanna was predicted to come ashore in Georgia and South Carolina late in the week and could regain hurricane strength later in the day. Tropical Storm Ike formed late Monday in the Atlantic Ocean and may become a hurricane in the next day or two as it approaches the Bahamas. Meanwhile, Tropical Storm Josephine formed in the eastern Atlantic, and the National Hurricane Center said it could near hurricane force as it moves west.
The verdict? The only certainty in the oil market remains volatility. "I have no idea where oil prices are going from here," says Gheit. "Go ask Goldman Sachs."
www.markethingych.com/news/story/goldman-sachs-raises-possibility-200/story.aspx?guid={4B702F7F-41F8-45F0-A133-630F12F2C764}
If link doesn't work, here is the article...
New 'super-spike' might mean $200 a barrel oil
Goldman's projections foretell persistent turbulence in energy prices
By Steve Gelsi, Markethingych
Last update: 1:42 p.m. EST March 7, 2008
Comments: 191
NEW YORK (Markethingych) -- 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.
Goldman analysts Arjun Murti, Kevin Koh and Michele della Vigna said prices have advanced more quickly than Goldman had forecast back in 2005, when it predicted a range of $50 to $105 a barrel as part of its "super-spike" oil theory.
"We characterized the upper end of the band as more likely to be driven by geopolitical turmoil and that recession was a key risk to our view," the analysts said. "In fact, oil prices have reached $100 a barrel without extraordinary turmoil, and the U.S. currently appears to be in recession."
Tacking on $15 a barrel to all of its oil estimates, Goldman now sees average selling prices of $95 a barrel for 2008, $105 a barrel for 2009 and $110 a barrel for 2010. The high end of its range is now $135 a barrel -- but Goldman hinted that prices could be headed even higher.
"As the lack of supply growth and price-insulated non-OECD demand suggest a future rebound in U.S. gross domestic product growth or a major oil supply disruption could lead to $150-$200 a barrel oil prices," Goldman said.
While saying it has a bullish long-term outlook, Goldman acknowledged that oil prices could correct from recent highs.
Goldman also reiterated its view that oil prices could fall as normal market conditions return over the next four years.
"The core of our 'super-spike' view is that oil prices will keep rising until demand declines globally on a multiyear basis, resulting in the return of excess capacity and a lower cost structure," Goldman's analysts said. "Given this view, once excess capacity returns, we think prices can move sharply lower."
The analysts reiterated their "attractive" view on the European energy sector, but kept a neutral view on the Russian sector due to costs. It upgraded Transneft and Sibir Energy to neutral from sell after underperformance, and cut Imperial Energy to sell from neutral on capital-spending requirements. End of Story
Steve Gelsi is a reporter for Markethingych in New York. Markethingych London bureau chief Steve Goldstein contributed to this report.
It was written back in March. Oil rocketed to an all time high of 147/barrel in July. And then the bubble hit. Now they say it's going to $80. Already fell below that.
Link...
www.businessweek.com/bwdaily/dnflash/content/sep2008/db2008092_750848.htm?chan=top+news_top+news+index+-+temp_top+story
Article:
Oil at $80 a Barrel?
With energy prices falling despite Hurricane Gustav, traders are talking about the end of a speculative bubble
images.businessweek.com/story/08/600/0902_gulf_oil.jpg
In this Sept. 25, 2005 photo, floodwaters surround storage tanks at an idle oil refinery in Port Arthur, Texas, in the aftermath of Hurricane Rita.
by Moira Herbst
In recent years, energy traders plus an active hurricane season have usually meant one thing for oil: higher prices. Yet with the departure of Hurricane Gustav, a rally for the embattled greenback is overshadowing new storm systems churning away in the Atlantic and showing how the prospect of a choppy U.S. economy is scaring traders far more these days than turbulent weather.
The price of a barrel of the benchmark West Texas Intermediate crude for October delivery dropped nearly $6 on Sept. 2, to settle at $109.71 on the New York Mercantile Exchange (CME). That's the lowest level since early April, and a slide of $37.56 since the record of $147.27 on July 11.
While Gustav appears to have delivered only a glancing blow to oil and gas assets in the Gulf of Mexico, the influence of Mother Nature has waned among traders and investors. The souring U.S. and global economies, alongside a strengthening dollar, are weighing heavily on oil prices, analysts say. In fact, the oil "demand destruction" implied by weak U.S. economic growth currently dwarfs both weather and geopolitical worries in determining oil's price. "If you can't rally with a hurricane up your nose—and 2 million barrels of refining capacity and 96% of your offshore supply under threat—it's hard to see what will cause a rally," says Peter Beutel, a veteran analyst with the energy risk management firm Cameron Hanover.
Back to Reality
Oil prices have slid so far and so fast that the retreat has led analysts to predict further puncturing of what they call a speculative bubble. Many analysts don't see a floor at $100, but rather at levels as low as $70 or $80. "This is start of a fall to $80 crude by the end of the year, maybe as early as September," says Joel Fingerman, principal of FundamentalAnalytics.com, a Chicago-based energy consulting firm.
"Oil prices are dropping because they are inflated," says Fadel Gheit, senior energy analyst for Oppenheimer (OPY). "You cannot sustain an artificial price forever. At the end of the day supply-demand fundamentals will take over."
Oil traders and some analysts have been blaming high oil prices on rising demand from developing economies, but now troubles in the U.S. economy are spreading across the globe. "A few months ago it was all about Chinese demand," says Stephen Schork, an energy consultant in Villanova, Pa., and editor of The Schork Report, a daily energy newsletter. "But a lot of the strength [in oil's price] was hype and hot air."
In addition to a gloomy economic environment and lower demand, a strengthening dollar is also behind oil's recent drop. Since July 15, the dollar has gained 8.5% against the euro. "The rise in the dollar is the best explanation of oil's drop," says Beutel.
Airline Stocks Ascend
While energy companies' stock prices fell on Sept. 2, airline stocks jumped at the prospect of cheaper fuel. Northwest Airlines (NWA) gained 13%, to $11.07. UAL (UAUA), the parent of United Airlines, was up 9.5%, to $12.16, and AMR (AMR), American Airlines' parent, jumped 8.7%, to $11.23. In 2008, airline shares have traded inversely to crude.
Despite the drop in crude prices, the market remains volatile. That's why some analysts say the market could again cede ground on supply and demand, resuming a trek upward. Earlier this year, several investment banks made headlines with reports forecasting a "super-spike" for crude, based on producers' inability to keep pace with soaring demand from China and the Middle East. Goldman Sachs (GS) energy strategist Arjun Murti was among those in that camp; he predicted $200 per barrel in coming months.
Indeed, crude prices could recover if the dollar weakens again or if oil-producing countries trim their output to keep prices high, as some analysts have speculated. OPEC is scheduled to meet on Sept. 9 in Vienna and has indicated it may defend a price of $100 per barrel.
Hanna on the Way
There is also ample meteorological uncertainty. On Tuesday, Tropical Storm Hanna was predicted to come ashore in Georgia and South Carolina late in the week and could regain hurricane strength later in the day. Tropical Storm Ike formed late Monday in the Atlantic Ocean and may become a hurricane in the next day or two as it approaches the Bahamas. Meanwhile, Tropical Storm Josephine formed in the eastern Atlantic, and the National Hurricane Center said it could near hurricane force as it moves west.
The verdict? The only certainty in the oil market remains volatility. "I have no idea where oil prices are going from here," says Gheit. "Go ask Goldman Sachs."