Analysts Predict $90 Oil and Beyond
By Heather DessingerTwo days after oil prices broke the $80 barrier, analysts are beginning to wonder aloud when, not if, prices will hit $90. The position that prices will become increasingly subject to short-term spikes and significant long-term price increases is growing in popularity among market watchers. Arjun Murti, an analyst for investment bank Goldman Sachs, said in December 2006 that “Resilient demand has caused us to revise up our super-spike range to $50-$105 per bbl up from $50-$80 per bbl previously.” He continued, “We believe oil markets may have entered the early stages of what we have referred to as a “super spike” period — a multi-year trading band of oil prices high enough to meaningfully reduce energy consumption and recreate a spare capacity cushion only after which will lower energy prices return.” Now, raw numbers are driving more and more analysts, such as Energy investment guru and Investec fund manager Tim Guinness, to join ranks with Murti. Guinness recently predicted that a supply crunch could drive crude prices all the way to $150 by 2010. It’s amazing, really. As Sherilee Bridge of Business Report wrote, “Somehow it seems hard to believe that just three years ago Deutsche Bank analysts were forecasting a 2010 oil price of $24 a barrel. What were they thinking?” Indeed. They certainly weren’t thinking about supply side economics.
Published Friday, September 14th, 2007 at 1:30 pm and filed under Industry News.