Goldman analyst states Oil prices to enter "super-spike" phase
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Goldman analyst states Oil prices to enter "super-spike" phase
If oil spiked again and went to a $100 a barrel, how do you think it would change the landscape of the auto industry?
Would a GM and Ford bankruptcy become a certainty?
from www.cnnfn.com
Would a GM and Ford bankruptcy become a certainty?
from www.cnnfn.com
Oil prices enter "super-spike" phase
Goldman analysts disagree with theory that prices peaked in '05; see five more years of price hikes.
December 13, 2005: 10:48 AM EST
LONDON (Reuters) - Already sky-high oil prices have entered a "super spike" phase that could last for four more years as global demand booms and supply growth slows, Goldman Sachs analysts said Tuesday.
"We disagree with what appears to be a growing consensus that crude oil prices reached their peak levels earlier in 2005," said the firm's Global Investment Research.
The analysts said oil demand remained resilient and supply growth lackluster, prompting them to keep their average U.S. crude price forecast for next year unchanged at $68 a barrel.
Oil futures on the New York Mercantile Exchange have averaged $56.59 so far this year.
The group also predicted oil prices could see 1970s-style price surges to as high as $105 a barrel during this period.
"With WTI oil prices on-track to average about $57 a barrel in 2005, we think the past phase will be remembered as the first of what could be a four-to-five-year 'super-spike' phase," their report said.
Goldman Sachs first mentioned a super-spike phase in March, five months before U.S. oil prices skyrocketed to a record $70.85 a barrel. Prices have since eased.
Supply concerns
The bank expressed doubt that OPEC producers, which supply a third of the world's crude, would be able to quench booming demand.
"It is the seeming insurmountable challenge of OPEC's needing to add real new capacity on a just-in-time basis that gives us so much confidence that we are in the super-spike phase," it said.
OPEC, which has been pumping at the highest rate for 25 years, is set to boost its spare capacity to 3.1 million bpd by the end of the 2006.
Despite hurricanes, high fuel prices and increased conservation, energy consumption in the United States remains strong, as does China and India, the bank said.
"Ultimately, we agree that the energy bull market will roll over once demand destruction really begins," it said. "We simply do not believe we have arrived at that point."
The International Energy Agency, the West's energy watchdog, estimated world oil demand could grow at an average of 1.8 million to 2.0 million barrels per day through 2010. Last year's demand growth of 3 million bpd was the highest for a generation.
Goldman analysts disagree with theory that prices peaked in '05; see five more years of price hikes.
December 13, 2005: 10:48 AM EST
LONDON (Reuters) - Already sky-high oil prices have entered a "super spike" phase that could last for four more years as global demand booms and supply growth slows, Goldman Sachs analysts said Tuesday.
"We disagree with what appears to be a growing consensus that crude oil prices reached their peak levels earlier in 2005," said the firm's Global Investment Research.
The analysts said oil demand remained resilient and supply growth lackluster, prompting them to keep their average U.S. crude price forecast for next year unchanged at $68 a barrel.
Oil futures on the New York Mercantile Exchange have averaged $56.59 so far this year.
The group also predicted oil prices could see 1970s-style price surges to as high as $105 a barrel during this period.
"With WTI oil prices on-track to average about $57 a barrel in 2005, we think the past phase will be remembered as the first of what could be a four-to-five-year 'super-spike' phase," their report said.
Goldman Sachs first mentioned a super-spike phase in March, five months before U.S. oil prices skyrocketed to a record $70.85 a barrel. Prices have since eased.
Supply concerns
The bank expressed doubt that OPEC producers, which supply a third of the world's crude, would be able to quench booming demand.
"It is the seeming insurmountable challenge of OPEC's needing to add real new capacity on a just-in-time basis that gives us so much confidence that we are in the super-spike phase," it said.
OPEC, which has been pumping at the highest rate for 25 years, is set to boost its spare capacity to 3.1 million bpd by the end of the 2006.
Despite hurricanes, high fuel prices and increased conservation, energy consumption in the United States remains strong, as does China and India, the bank said.
"Ultimately, we agree that the energy bull market will roll over once demand destruction really begins," it said. "We simply do not believe we have arrived at that point."
The International Energy Agency, the West's energy watchdog, estimated world oil demand could grow at an average of 1.8 million to 2.0 million barrels per day through 2010. Last year's demand growth of 3 million bpd was the highest for a generation.
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From: Metairie La.
Re: Goldman analyst states Oil prices to enter "super-spike" phase
Thanks.
"The bank expressed doubt that OPEC producers, which supply a third of the world's crude, would be able to quench booming demand."
Their may be truth in this. The U.S. needs to concentrate more on domestic oil. Let China and the others deal with OPEC. Everytime OPEC farts, our gas prices go up.
I remember watching Charlie Rose a couple of weeks ago and his guest was the CEO of Exxon-Mobile. I can't remeber his name. It was an interesting interview. One of the topics brought up during the interview was refining capacity. The CEO says that it takes 4 years to get a permit to build a refinery. That's not counting the time it takes to build a refinery. I'm guessing five years. That's 9-10 years. So instead of building new refineries, they try to add capacity to the existing ones.
There comes a point where new refineries will have to be built. As long as oil is a world market for us, gas prices will always fluctuate. It is not just our demand that drives prices. We all (U.S., Europe, China, India,...) get gas from the same place. Something has to give.
"The bank expressed doubt that OPEC producers, which supply a third of the world's crude, would be able to quench booming demand."
Their may be truth in this. The U.S. needs to concentrate more on domestic oil. Let China and the others deal with OPEC. Everytime OPEC farts, our gas prices go up.
I remember watching Charlie Rose a couple of weeks ago and his guest was the CEO of Exxon-Mobile. I can't remeber his name. It was an interesting interview. One of the topics brought up during the interview was refining capacity. The CEO says that it takes 4 years to get a permit to build a refinery. That's not counting the time it takes to build a refinery. I'm guessing five years. That's 9-10 years. So instead of building new refineries, they try to add capacity to the existing ones.
There comes a point where new refineries will have to be built. As long as oil is a world market for us, gas prices will always fluctuate. It is not just our demand that drives prices. We all (U.S., Europe, China, India,...) get gas from the same place. Something has to give.
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From: Frankfort, KY U.S.A.
Re: Goldman analyst states Oil prices to enter "super-spike" phase
Gas will be back up to $2.75 -$3.00 gal. because of the BIG fire over in England, even though it didn't happen here. Its just an excuse to raise the price, like everything else.
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Re: Goldman analyst states Oil prices to enter "super-spike" phase
Plus it makes no sense to build new refineries because you will have to pay for them and increasing supply just eats into profit margins.
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From: Roseville, MI, USA
Re: Goldman analyst states Oil prices to enter "super-spike" phase
Originally Posted by mastrdrver
How long have people been talking about $100 oil? It seems like they almost want it to happen.
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From: O-Town
Re: Goldman analyst states Oil prices to enter "super-spike" phase
One more interesting note is that the supply is not back to snuf of what it was pre-Katrina and prices are still lower then they were, in some places. Prices may go up, but I don't see them rising until next spring.
Jackass, I have to disagree with you comment on OPEC farting. While it maybe somewhat true, mostly tied to happenings in Iraq, most the time when oil jumps is when something happens to a refinery or some idiot comes out and suddenly able to predict the future.
I would like to know if this guy owns any oil stock or if a company he owns has any interest?
Jackass, I have to disagree with you comment on OPEC farting. While it maybe somewhat true, mostly tied to happenings in Iraq, most the time when oil jumps is when something happens to a refinery or some idiot comes out and suddenly able to predict the future.
I would like to know if this guy owns any oil stock or if a company he owns has any interest?
Last edited by mastrdrver; Dec 13, 2005 at 10:34 PM.
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Joined: Aug 2003
Posts: 269
From: Metairie La.
Re: Goldman analyst states Oil prices to enter "super-spike" phase
Originally Posted by mastrdrver
One more interesting note is that the supply is not back to snuf of what it was pre-Katrina and prices are still lower then they were, in some places. Prices may go up, but I don't see them rising until next spring.
Jackass, I have to disagree with you comment on OPEC farting. While it maybe somewhat true, mostly tied to happenings in Iraq, most the time when oil jumps is when something happens to a refinery or some idiot comes out and suddenly able to predict the future.
I would like to know if this guy owns any oil stock or if a company he owns has any interest?
Jackass, I have to disagree with you comment on OPEC farting. While it maybe somewhat true, mostly tied to happenings in Iraq, most the time when oil jumps is when something happens to a refinery or some idiot comes out and suddenly able to predict the future.
I would like to know if this guy owns any oil stock or if a company he owns has any interest?
Haz-matt. You can't just keep adding capacity to existing refineries. Eventually you are going to run out of room. Exxon and the other oil companies have the money to build new refineries.
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Joined: Jan 2000
Posts: 10,285
From: Albany, NY
Re: Goldman analyst states Oil prices to enter "super-spike" phase
The US needs to stop using foreign oil ASAP* (ASAP = 10 years)
If OPEC was smart they would never let oil get that high. Even though they need the money to fund terrorism against us, The spike in price will only help them short term and hurt them long term by pushing western consumer to conserve more and put more effort into alternate fuel sources. It will also slow grow in booming India and China. Both have nuke power plants and arn't affraid to built more like the USA. They might just decide to skip to oil age and go right into nuclear generated hydrogen. Prediction: by 2015 oil will be $20 after to oil bubble pops.
It was smart of GM to go hybrid in the 2007 Tahoe, that new 2 stage system looks neat and should be an option in every GM truck based SUV by 2009, that is if GM still wants people to be buying there large SUV by then.
If OPEC was smart they would never let oil get that high. Even though they need the money to fund terrorism against us, The spike in price will only help them short term and hurt them long term by pushing western consumer to conserve more and put more effort into alternate fuel sources. It will also slow grow in booming India and China. Both have nuke power plants and arn't affraid to built more like the USA. They might just decide to skip to oil age and go right into nuclear generated hydrogen. Prediction: by 2015 oil will be $20 after to oil bubble pops.
It was smart of GM to go hybrid in the 2007 Tahoe, that new 2 stage system looks neat and should be an option in every GM truck based SUV by 2009, that is if GM still wants people to be buying there large SUV by then.
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Re: Goldman analyst states Oil prices to enter "super-spike" phase
The major problem it the global infrastucture to drill, refine, and distribute oil is dilapidated. OPEC countries are the worse offenders, since they did not want impove and/or expand their infrastucture over the last 15-20 years because they were afraid improved efficiencies would increase production that would eventually drive crude oil prices down.
The problem now is that China and India growing economies have exploded and have taken any spare capacity OPEC previously had in the past. Since OPEC's infrastructure is old, it would take them a decade or more for them to get things up to speed to meet the 'new' global demand.
Here on US soil we havent built a new refinery in years and oil corps have just been expanding their existing refineries to get around evironmental restrictions and new drilling is nothing more then a 'pipe' dream.
The problem now is that China and India growing economies have exploded and have taken any spare capacity OPEC previously had in the past. Since OPEC's infrastructure is old, it would take them a decade or more for them to get things up to speed to meet the 'new' global demand.
Here on US soil we havent built a new refinery in years and oil corps have just been expanding their existing refineries to get around evironmental restrictions and new drilling is nothing more then a 'pipe' dream.
Last edited by johnsocal; Dec 14, 2005 at 10:56 AM.
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Joined: Oct 2004
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From: Beaumont, TX
Re: Goldman analyst states Oil prices to enter "super-spike" phase
Originally Posted by Jackass
Thanks.
"The bank expressed doubt that OPEC producers, which supply a third of the world's crude, would be able to quench booming demand."
Their may be truth in this. The U.S. needs to concentrate more on domestic oil. Let China and the others deal with OPEC. Everytime OPEC farts, our gas prices go up.
I remember watching Charlie Rose a couple of weeks ago and his guest was the CEO of Exxon-Mobile. I can't remeber his name. It was an interesting interview. One of the topics brought up during the interview was refining capacity. The CEO says that it takes 4 years to get a permit to build a refinery. That's not counting the time it takes to build a refinery. I'm guessing five years. That's 9-10 years. So instead of building new refineries, they try to add capacity to the existing ones.
There comes a point where new refineries will have to be built. As long as oil is a world market for us, gas prices will always fluctuate. It is not just our demand that drives prices. We all (U.S., Europe, China, India,...) get gas from the same place. Something has to give.
"The bank expressed doubt that OPEC producers, which supply a third of the world's crude, would be able to quench booming demand."
Their may be truth in this. The U.S. needs to concentrate more on domestic oil. Let China and the others deal with OPEC. Everytime OPEC farts, our gas prices go up.
I remember watching Charlie Rose a couple of weeks ago and his guest was the CEO of Exxon-Mobile. I can't remeber his name. It was an interesting interview. One of the topics brought up during the interview was refining capacity. The CEO says that it takes 4 years to get a permit to build a refinery. That's not counting the time it takes to build a refinery. I'm guessing five years. That's 9-10 years. So instead of building new refineries, they try to add capacity to the existing ones.
There comes a point where new refineries will have to be built. As long as oil is a world market for us, gas prices will always fluctuate. It is not just our demand that drives prices. We all (U.S., Europe, China, India,...) get gas from the same place. Something has to give.
His name is Lee Raymond.
Increaseing refinery capacity is done only in small percentages. (i.e., 350K bbl/day refinery increases throughput 1% => 3500 bbl/day) And that increase also takes time & $$$ to engineer & implement the removal of bottlenecks that currently limit throughput.
BTW I lived in Metairie most of my life, How's things there? Life getting back to normal?