$100-a-barrel oil may be only a few months away
By Mark Shenk Bloomberg NewsPublished: July 24, 2007
NEW YORK: The $100-a-barrel oil that Goldman Sachs Group said would prevail by 2009 could be just a few months away.
Jeffrey Currie, a commodity analyst in London for Goldman Sachs, the largest brokerage firm, said that $95 crude was quite likely this year unless OPEC unexpectedly increased production and that declining inventories were raising the chances for oil prices to reach $100.
Jeff Rubin, chief strategist at the brokerage unit of Canadian Imperial Bank of Commerce in Toronto, said $100 a barrel could come next year.
John Kilduff of the New York office of the futures trading firm Man Financial said, "We're only a headline of significance away from $100 oil. The unrelenting pressure of increased demand has left the market a coiled spring."
New disruptions of Nigerian or Iraqi supplies, Kilduff said, or any military strike against Iran might cause the rise.
Higher prices will increase revenue for energy producers from Exxon Mobil to PetroChina, while eroding profit for airlines and railroads. The United States and other oil-importing countries risk higher inflation, while increased energy costs could restrain growth.
The benchmark crude oil future ended last week at $75.57 a barrel on the New York Mercantile Exchange, twice the level of early 2003. A record number of options have been sold that give the buyer the right to buy crude oil at $100. The contracts, covering 50 million barrels, pay off only if oil were to go above the target price.
Arjun Murti, a Goldman Sachs analyst in New York, roiled markets in March 2005 with a report saying prices could touch $105 a barrel during a "superspike" period because demand was stronger than anticipated.
Currie, the global head of commodities research for Goldman Sachs, is predicting that oil prices will probably touch a record high and stay at unprecedented levels for months or years. The benchmark's record high is $78.40 a barrel, reached July 14, 2006.
The failure of near-record fuel prices to restrain global oil demand growth is what concerns Rubin.
Outside the United States, the growth in demand is being led by India and China, where growing economies mean more cars and trucks and more factories that use oil and natural gas.
Is the sky the limit? Oil prices could triple in three months to more than $200 a barrel, given the right circumstances, according to Matthew Simmons, chairman of Simmons, an investment bank in Houston. "Oil is still cheap," he said. "In the 20th century, with a few exceptions, oil was almost free."
By Mark Shenk Bloomberg NewsPublished: July 24, 2007
NEW YORK: The $100-a-barrel oil that Goldman Sachs Group said would prevail by 2009 could be just a few months away.
Jeffrey Currie, a commodity analyst in London for Goldman Sachs, the largest brokerage firm, said that $95 crude was quite likely this year unless OPEC unexpectedly increased production and that declining inventories were raising the chances for oil prices to reach $100.
Jeff Rubin, chief strategist at the brokerage unit of Canadian Imperial Bank of Commerce in Toronto, said $100 a barrel could come next year.
John Kilduff of the New York office of the futures trading firm Man Financial said, "We're only a headline of significance away from $100 oil. The unrelenting pressure of increased demand has left the market a coiled spring."
New disruptions of Nigerian or Iraqi supplies, Kilduff said, or any military strike against Iran might cause the rise.
Higher prices will increase revenue for energy producers from Exxon Mobil to PetroChina, while eroding profit for airlines and railroads. The United States and other oil-importing countries risk higher inflation, while increased energy costs could restrain growth.
The benchmark crude oil future ended last week at $75.57 a barrel on the New York Mercantile Exchange, twice the level of early 2003. A record number of options have been sold that give the buyer the right to buy crude oil at $100. The contracts, covering 50 million barrels, pay off only if oil were to go above the target price.
Arjun Murti, a Goldman Sachs analyst in New York, roiled markets in March 2005 with a report saying prices could touch $105 a barrel during a "superspike" period because demand was stronger than anticipated.
Currie, the global head of commodities research for Goldman Sachs, is predicting that oil prices will probably touch a record high and stay at unprecedented levels for months or years. The benchmark's record high is $78.40 a barrel, reached July 14, 2006.
The failure of near-record fuel prices to restrain global oil demand growth is what concerns Rubin.
Outside the United States, the growth in demand is being led by India and China, where growing economies mean more cars and trucks and more factories that use oil and natural gas.
Is the sky the limit? Oil prices could triple in three months to more than $200 a barrel, given the right circumstances, according to Matthew Simmons, chairman of Simmons, an investment bank in Houston. "Oil is still cheap," he said. "In the 20th century, with a few exceptions, oil was almost free."
