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WTF Headline off the Day? GS Says Oil 'Likely' to Reach $150-$200

Today's WTF headline isn't a criticism of the financial media so much as a disturbing forecast:

Goldman's Murti Says Oil `Likely' to Reach $150-$200
Crude oil may rise to between $150 and $200 a barrel within two years as growth in supply fails to keep pace with increased demand from developing nations, Goldman Sachs Group Inc. analysts led by Arjun N. Murti said in a report.

New York-based Murti first wrote of a "super spike'' in March 2005, when he said oil prices could range between $50 and $105 a barrel through 2009. The price of crude traded in New York averaged $56.71 in 2005, $66.23 in 2006 and $72.36 in 2007. Oil rose to an intraday record $120.93 today on speculation demand will rise during the peak U.S. summer driving season.

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Before you blow the guy off as an energy extremist, his $105 target 3 years ago was widely derided ("another Henry Blodget wannabe").

It turns out he was way too conservative -- The price shot $16 higher than his "ridiculous" target, and a year earlier than forecast.

I am not saying we are going to see $200 oil, but do not be too quick to blow off Murti.

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Source:
Goldman's Murti Says Oil `Likely' to Reach $150-$200   
Nesa Subrahmaniyan
Bloomberg, May 6 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayxRKcAZi630&

Tuesday, May 06, 2008 | 09:00 AM | Permalink | Comments (38) | TrackBack (0)
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Comments

I just heard demand was down for oil and there is a high level of inventory. So what is causing the price to go up?

Oil is hard to find and more expensive to extract. The peak oil books I have read have been stunningly accurate.

Posted by: Boiled Frog | May 6, 2008 9:15:42 AM