Capital Gold Group Reports: GOLDMAN SACHS Predicts $200 Oil
By Steve Gelsi, MarketWatch
NEW YORK (MarketWatch) -- 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.
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 multi-year 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.Capital Gold Group, oil prices, Goldman Sachs, U.S. recession
