Jan. 19 (Bloomberg) -- Goldman Sachs Group Inc. commodity analyst Jeffrey Currie said he expects a “swift and violent rebound” in energy prices, including oil, in the second half of the year.Here's Jeffrey on November 26, 2007.
Despite his recent caution, Currie remains a long-term bull on oil and other commodities. He forecasts that U.S. light sweet crude will be $85 a barrel at yearend and $95 in 12 months.Sorry. That's not what happened.
I wonder how many people at Goldman Sachs have positioned their portfolios for rising oil prices. Like Boone Pickens saying that oil would hit $200 and stay there forever, while at the same time asking Congress to help pay for his wind farm.
Update: Currie may be right. It struck me when I was driving home tonight that Saudi Aramco has been doing a ton of recruiting ads on the radio these past few weeks. What do they know that we don't?
7 comments:
A friend of mine who travels in interesting circles tells me that commodity investors are scrambling to find storage for petroleum they are buying up en masse, betting that the price of oil will have a dramatic upswing in the not too distant future. Supposedly there is a dearth of available storage space. Of course, all this added inventory has the effect of actually decreasing the price of oil, making the move a self-unfulfilling prophecy. I am curious as to what the long-term effect of this laoding up will be (if, in fact, this information is accurate).
Bob - that isn't actually a bet, it is reality. Oil is currently in a contango, where futures contracts are exceeding the value of the spot market. Many of the large players are simply leasing ships, filling them with oil and anchoring them for a while.
I don't have stones large enough to play a game of that magnitude.
Sounds like this move to store oil sounds a lot like the housing boom...you know, with this teaser rate, it's okay because I'll just refinance in a few years....
Another friend who is pretty senior in Aramco's US based staff tells me that existing oil fields are declining at about 9%/year. While he thinks there is plenty of oil left, he does not think the global exploration/extraction rate is steep enough to counter this decline. Thus, within about five years, you can expect another severe uptick in prices again. I guess we'll see.
Oil's about to drop below $30/bbl. here on Inauguration Day.
Unless Iran starts torpedoing tankers, where will the price increase come from?
We're not anywhere near the end of the current recession.
Economidies thinks that the tipping point between the decline in production and the dearth of new reserves coming online is near and guesses that the current price of oil cannot be stable but should in fact be closer to $70 a barrel.
http://www.energytribune.com/articles.cfm?aid=1238
The writer is totally fair, and there is no question.
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