Goldman Sachs: $105 per barrel by End of 2008

By: Lowell
Published On: 12/12/2007 9:49:39 AM

Now here's something to look forward to in 2008!

Goldman Sachs...the most active investment bank in energy markets, raised its 2008 oil-price forecasts, expecting OPEC to keep a lid on supply even as global demand growth slows.

Goldman expects U.S. crude (CLc1> to average $95 a barrel in 2008, up $10 from the previous projection, it said in its outlook for 2008. The price could reach $105 by the end of 2008, it said.

And if that's not enough to celebrate, how about this?

The bank also sees higher prices in the medium term and lifted its five-year forward forecast by $10 to $80 [per barrel].

In other words, we're talking about high oil prices forever.  All the more reason to break our "oil addiction" -- as if sending billions of dollars per year to Saudi Arabia (and the terrorists they buy off with that money) isn't enough!

P.S.  We're at about $90 per barrel right now.

Comments



Given the lack of political leadership that we have had... (ericy - 12/12/2007 10:56:51 AM)

I suppose we are going to use scarcity and higher prices as a means of last resort to reduce our dependency on oil.  Unfortunately there are still those that think we can drill our way out of this mess, or that we can convert more and more of our food into fuel.

My girlfriend works for a major food distribution company that sells to restaurants.  She was showing me a chart this morning that showed vegetable oil prices up 60% this year for soybean oil.  Similar large increases for corn oil and canola.  You can see soybean oil prices here:

http://futures.tradingcharts.c...

In large part I believe because farmers are planting more corn to cash in on the ethanol mania, which means reduced supplies of everything else.  It could be influenced by demand for vegetable oil for biodiesel, but I didn't think that the production was high enough yet to have this kind of impact to the market.  Higher fuel costs also imply higher transportation costs for the vegetable oil.



Scarcity and speculation (hereinva - 12/12/2007 5:01:09 PM)
Learned in grade school the difference between a renewable and non-renewable resource (gosh darn public school system).

Fossil fuels (oil in this case) are non renewable..once burned it does not replenish itself..so at some point we will run out of oil- period. The demand for oil has ratcheted upward via China and India's growing economies. Thats very basic info.

That being said, how much of the dramatic price increase of crude oil is a direct result of market speculators versus actual consumption. Large institutional investors can make a "play" on the oil markets and drive the price through the $100 a barrel roof. The WSJ ran an article back in October 2007 on the role Cushing, Oklahoma plays in the oil market. I thought I understood a little about oil markets..reading the article opened my eyes. The article is posted on this
web   site.

from that article:

Now that market conditions have shifted, economists worry that institutional investors will push up oil prices even more. Conditions are especially profitable now for the pension funds and others who are holding near-term oil futures. More money is pouring into this trading strategy, exerting upward pressure on prices.