"Super-Spike" Could Lift Oil to $200: Goldman

GOLDMAN SACHS, OIL & GAS, ENERGY, COMMODITIES

By Reuters

| 06 May 2008 | 08:28 AM ET

Oil could shoot up to $200 within the next two years as part of a "super-spike" driven by poor growth in oil supplies, investment bank Goldman Sachs said in a research note.

"We believe the current energy crisis may be coming to a head, as a lack of adequate supply growth is becoming apparent," Goldman said in the note made available to Reuters on Tuesday.

Oil hit a new record near $121 a barrel on Tuesday, continuing an advance which has seen it double over the past 12 months.

"The possibility of $150-$200 per barrel seems increasingly likely over the next 6-24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the up-cycle remains a major uncertainty," Goldman said.

Goldman, which was one of the first to point to a triple digit oil price more than two years ago, said it believed the market was approaching the crunch in the "super-spike."

The "super-spike" theory argues that a lack of adequate supply growth along with price-insulated demand growth in non-OECD countries will lead to a dramatic and continuous rise in oil prices that will ultimately lead to a sharp correction in oil demand.

Goldman analysts said the underlying drivers of the rise in oil prices remained firmly in place, noting poor growth in non-OPEC supplies, low OPEC spare capacity, restriction on foreign investment in key oil producing nations and healthy demand growth in non-OECD economies.

"In our view, a gradual rally in prices is likely to be longer lasting than a sharp, sudden spike," the note written by U.S.-based analyst Arjun Murti said.

Goldman said it had raised its spot oil price forecasts for U.S. WTI crude for 2008 through to 2011 to $108 rising to $110 and $120 a barrel, up from $96 rising to $105 and $110 respectively in its earlier forecast.

"We see risk to our 2008 and 2009 forecasts as distinctly to the upside," it said.

--Copyright 2008 Reuters. Click for restrictions.

MSN Privacy . Legal
© 2008 CNBC.com

These articles are provided for informational purposes only and were obtained from publicity available sources on the Internet. These articles do not constitute financial advise or trading recommendations by Global Asset Management ("Global"). Global neither warrants the accuracy or completeness of the information contained in these articles, undertakes to update them, nor is it responsible for any omission or error contained in these articles. Viewers are encouraged to conduct, and should only rely on, their own independent research.
The purchase or sale of precious metals involves substantial risk and volatility. If you are contemplating purchasing and/or selling precious metals, you should consult with an independent financial advisor to learn about the inherent risks. Global does not render, and nothing in this website should be construed as, financial advise, a trading recommendations or a solicitation for the purchase or sale of precious metals.
 
 

Daily Chart : Gold

Daily Chart : Silver

Daily Chart : Platinum

Daily Chart : Palladium

 
 
 

Copyright © 1996-2010 Global Asset Management. All rights reserved.

2425 Hollywood Blvd. Suite 100. Hollywood, Florida 33020 :: info@globalam.net

phone: 954.921.1021 :: fax: 954.921.1536 :: toll free: 1.888.421.1021