Goldman Raises 2006 Oil Forecast to $68, Sees $60 Long Term Aug. 18 (Bloomberg) -- Goldman Sachs Group Inc., the third- biggest U.S. securities firm by market value, raised its oil price forecasts for next year to $68 a barrel and said crude will stay at around $60 a barrel for years to come. Goldman's projection for New York crude prices for 2006 was boosted from $55 a barrel. The forecast for oil to stay at $60 after that was raised from $45 a barrel because cost uncertainties have delayed investment in new oil projects, according to the Aug. 17 report from the firm's Commodity Research group, headed by Steve Strongin. Goldman Sachs earlier this year was criticized after an equity analyst there, Arjun N. Murti, said oil prices could experience a ``super spike'' to $105 a barrel should supplies be disrupted from the Middle East. Goldman is one of Wall Street's two largest commodity traders, along with Morgan Stanley. Goldman and Morgan Stanley each get more than $1 billion a year in revenue in the $60 billion-a-day energy-trading market, according to estimates by Sanford C. Bernstein & Co. analyst Brad Hintz in New York. Oil for September delivery on the New York Mercantile Exchange was trading at $63.32 a barrel at 9:45 a.m. London time, having dropped from a record $67.10 last week, a record for a contract nearest to expiration. Oil futures for delivery in December 2007 were traded at $61.34 today. To contact the reporter on this story: Stephen Voss in London at sev@bloomberg.net
Here is a good question regarding this "prediction". What changed in the last 12 months to facilitate such an interpretation ? Did China "suddenly" and irrevocably change its demand structure ? Did the world markets ? This type of prediction appears to ignore the effect of consservation on demand. My reading: Energy has suddenly becomes the "hot" trading vehicle and perhaps is entering its own "mania" stage. People will simply greatly reduce their use of energy when it hits their pocketbooks: so will industry. Yes there is a plateau of demand that cant be reduced through conservation but I dont see that that has radically changed over the last two years.
IMO, everyone who puts forth an analysis for oil (typically it will say something like demand is going up and prices going up), ignores or barely mentions new supplies that are a result of the huge investments in E&P activity the past couple of years. There will be a lot of new production coming on stream starting next year and its addition may exceed demand. To me as you said, oil is in a bubble. Every news report I see talks only about higher prices and usually when that happens a top is not far behind. An example of new production is Esso Exploration Angola (Block 15) Limited just getting online with about 500000 bbls a day of new capacity. Or BP's problematic Thunderhorse field due to start production of 250M bbl/d sometime this year or next. Of course, there are many other large, new projects starting up in the next 36 months. Non conventional projects such as Syncrude currently producing about 250M per day expanding to more than double that. Qatar is adding GTL projects with capacity over 300M bbl/day. Another factor that seems to be left out of the pricing forecasts is that year over year, world oil demand is up a little over 1% while production is up about 4%. DS DS
i remember oil at $10. my first trade ever was at 11.25. all i ever heard then was how this the end of oil,oil is going to 5,we will never see 20 again etc. its the same crap now. these experts are twits who either need attention or are just supporting thier own or their firms positions. nobody says that these prices will affect demand nope just hype.
Oil is a $50 stock.... Methods to trade are the same.... Just another stock...another trade.... The difference here is that this stock´s product has a direct and real effect on everyone....whereas some stocks do not... Lots of emotion..naturally....
I remember when Esso & Arco sold gas for $00. 25.9;and they had a green dino & free tire air to help sell gas. Was strange to me when i shopped around very extensively; gas guzzlers cars were selling well,however thats one of the major thing i check[miles per gallon]. CapMac ; At least GS/Bloomberg had enough accuracy to use the word ''forcast ''& not predict. Investors Business Daily had a neat stock sector leaderlist today; oil/gas sector, real estate = top 7 sectors again and again
Anything that is in the general media is there for a reason. Useful and reliable information doesn't make the headlines or news pages ....
I know there are few threads dealing with crude here, but I thought to open this one to address specifically crude direction from a technical analysis stand point. On a daily chart, and using elliott waves, I have a wave 5 target at 78ish that should hit in 2-3 weeks from today. On a weekly chart, I have a w3 trgt at 72 and a w5 trget at 87ish in about 20 weeks from now,ie Jan, 2006. Given the controversy of elliott wave counts, I would suggest to concentrate more on alternative waYs of finding targets than on analysing elliott. Thx. The pandora box is open ...!!!