Our Awful Situation

Oil prices: $200 a barrel or $70 a barrel?

Posted by Charlie Kilo on May 6th, 2008

Goldman analyst predicts $150 to $200 oil could soon be reality, but peak price still unclear:

A Goldman Sachs analyst predicts that oil prices could reach $150 to $200 a barrel over the next 6 months to two years, but said that how far prices could climb still “remains a major uncertainty.”

“We believe the current energy crisis may be coming to a head, as the lack of adequate supply growth is becoming apparent,” analyst Arjun N. Murti wrote in a client note.

Oil for June delivery hit a record $122 a barrel Tuesday in electronic trading on the New York Mercantile Exchange.

Murti said his highest forecast prices represent the possible culmination of a “super spike” — the steady rise in oil prices the analyst first called for three years ago.

At the time of his prediction in April 2005, the forward crude contract settled at $57.01 a barrel. Murti saw prices ascending as high as $105 — saying that was the price at which it might be necessary to pull back significantly on energy consumption. One contrarian analyst called that figure “laughable.”

That analyst, Citi Investment Research’s Tim Evans, asserted in a client note Tuesday that oil prices have the same potential to fall by $40 to $50 per barrel over the next 6 months to two years as to rise like Murti predicts.

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Our Awful Situation

Oil prices: $200 a barrel or $70 a barrel?

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