Alarming Prediction Pushes Up Oil Costs

Prices Could Hit $200 Within Two Years, New Goldman Sachs Analysis Shows

(AP)  Oil futures blasted to a new record near $123 a barrel Tuesday, gaining momentum as investors bought on a forecast of much higher prices and on any news hinting at supply shortages. Retail gas prices edged lower, but appear poised to rise to new records of their own in coming weeks.

A new Goldman Sachs prediction that oil prices could rise to $150 to $200 within two years seemed to motivate much of Tuesday's buying, although a falling dollar and increasing concerns about declining crude production in Mexico and Russia contributed, analysts say.

The Energy Department raised its oil and gasoline price forecasts, but also predicted that high prices will cut demand more than previously thought.

Light, sweet crude for June delivery jumped to a new record of $122.73 a barrel before retreating to settle up $1.87 at a record $121.84 on the New York Mercantile Exchange.

Oil prices have nearly doubled from about $62 a barrel a year ago, which Goldman sees as a sign that the world is in the midst of a "super spike" in oil prices. Analyst Arjun Murti said in a research note released Monday that prices would ultimately force demand to fall sharply.

Not everyone shares Goldman's view. Tim Evans, an analyst at Citigroup Inc., countered Goldman's analysis with a note predicting that crude prices could as easily fall to $40 a barrel as rise to $200 over the next two years because supplies are, as Evans put it, comfortable.

James Cordier, president of Tampa, Fla., trading firms Liberty Trading Group and OptionSellers.com, said Goldman's prediction isn't necessarily new: "We've heard numbers like these out of Goldman Sachs, especially over the last 12 months."

Indeed, it's not the first time Murti has espoused a super spike theory; in an April 2005 note, he predicted the oil market was in the early stages of an unprecedented rally that would send prices from a then-record of about $57 a barrel to $105.

But some investors respond to such predictions by buying, Cordier said.

Meanwhile, in a monthly report, the Energy Department's Energy Information Administration predicted oil prices will average $110 a barrel this year, up $9 from last month's forecast. The EIA also said high prices will cut U.S. demand for petroleum products by 330,000 barrels a day this year; last month, the EIA predicted U.S. petroleum consumption would fall by 210,000 barrels a day.

But strong demand for oil from countries such as China, India, Russia, Brazil and in the Middle East will support high prices and keep global oil demand growing by about 1.2 million barrels a day this year, unchanged from last month's forecast, the EIA said.

A falling dollar on Tuesday also gave traders reason to buy. Investors often buy commodities such as oil as a hedge against inflation when the dollar falls, and a weaker greenback makes oil cheaper to investors overseas. Many analysts feel the dollar's protracted decline is the real reason oil prices have nearly doubled since last year.

Cordier said investors are also increasingly concerned about falling oil production in Russia and Mexico, which are major oil producers. And prices are still supported by concerns about supply disruptions in Nigeria, where production at a Royal Dutch Shell PLC facility was cut after a weekend attack, and in Iraq, where Kurdish rebels warned they could launch suicide attacks against American interests to punish the U.S. for sharing intelligence with Turkey after Turkey bombed rebel bases in Iraq on Friday.

At the pump, meanwhile, the national average price of a gallon of regular gas slipped 0.1 cent overnight to $3.61, according to AAA and the Oil Price Information Service. Analysts are split over how high gas will go; while prices have slipped lower since May 1, leading some analysts to say gas is close to peaking, others predict the fuel will follow oil's upward surge.

"You're going to see new highs for gas prices, probably for the weekend," said Cordier, who predicts an average price of $4 a gallon in the coming weeks.

In its report, the EIA said gas prices will peak at a monthly average of about $3.73 a gallon in June, about 13 cents higher than its previous forecast.

In other Nymex trading Tuesday, June gasoline futures rose 5.26 cents to settle at $3.1055 a gallon after earlier setting a new trading record of $3.126. June heating oil futures rose 4.7 cents to settle at $3.3535 a gallon after rising to their own trading record of $3.3712, and June natural gas futures fell 2.8 cents to settle at $11.15 per 1,000 cubic feet.

In London, June Brent crude futures rose $2.18 to settle at $120.31 a barrel on the ICE Futures exchange.

[noloyalisti]

Oil is the ruling class'' answer for the next economic boom. The dot-com boom, then the housing boom, now the oil boom. The people who will make out are the ones who are the insiders, the corporate CEOs who run the United Government for their own benefit.

[forthepeopl1]

going "under water" as their loans exceed the please this is a simple thing to fix, why are you bending over for all of the wallstreet scum.
you have the right to do what this paulson/ben did for wallstreet,saying they had to to save america. so you can say the same thing, but this time you would be saveing america, and not wallstreet.
you must come out and stop the forcloseing of all these millions of homes, now,
ALL YOU HAVE TO DO IS MANDATE THAT ALL MORTGAGES THAT HAVE BEEN TAKEN OUT FROM 2000 TO 2007 BY ALL AMERICANS TO BE RE-FI A.S.A.P. NO EXCEPTIONS,


NO MATTER WHAT THE CREDIT IS, THEY WILL RE-FI EVERYONE AT JUST OVER PRIME, AND AT A RATE OF 40% OF WHAT IS OWED ON THE PROPERTY( PERSONAL HOMES ONLY)!!
WHY, BECAUSE MOST HOST ARE SELLING AT FORCLOSER FOR 20 TO 30 CENTS ON THE DOLLAR, SO AS TO WHAT PAULSON SAID TO BEARSTEARN 2 DOLLARS IS BETTER THAN NO DOLLARS SO TAKE THE DEAL..NOW REMEMBER ALL OF YOU, IF THIS COMPANY IN 6 MONTHS LOST 98% OF THEIR VALUE FROM 700 BILLION TO WHAT IS IT NOW. AND FOR SOMEONE TO COME IN AND BUY IT FOR NOTHING, WHAT IS THE REAL VALUE OF ALL THESE HOMES???NOBODY KNOWS, SO WHY NOT JUST START OVER??? AND STOP THE BLEEDING FOR ALL AMERICANS.

[e-mail]
DAVID A BELANGER
FOR COMMON SENSE THIS IS SO EASY TO FIX DONT MAKE IT HARDER THAN IT IS PEOPLE.


WHAT MORE BAILOUTS FOR WALLSTREET COMING.

[nothappyatall]

worthless paper scrip it takes to buy something real like oil, is going to go up. In the 1920s, the Germans printed their money so fast it took a wheel barrow to carry home one''''s pay check.
Seafang"

I Read the story of Friederun Stockmann in her autobiography, that during WW2 the deutsch mark in Germany where she lived fell in value so rapidly that one million deutsch marks was a fortune one morning, and by the afternoon it''s value fell so fast that a woman''s hat in a store window she wanted was priced one million deutsch marks.
She feared the cashiers check an American was sending her for a dog would devalue rapidly before it even cleared the bank, so the buyer wired the money- one million deutsch marks, and Friederun had all kinds of plans for what to use the money for- needed food, supplies, meat, tires for the car the army had appropriated off etc. But as I said, in one afternoon that money was worthless.

[seafang]

Earth to Wall street; anybody out there?

If you have a brain dead dummy like Bernanke printing money as fast as his little old press can go, and keeping on dropping interest rates, so people can easily get more of the fake money, then it stands to reason, that the amount of that worthless paper scrip it takes to buy something real like oil, is going to go up. In the 1920s, the Germans printed their money so fast it took a wheel barrow to carry home one''s pay check. The entire National debt of Germany could have been paid off with one US Lincoln penny, and still have change left over. Well when you keep on electing idiots to important public jobs, then this foolishness is what you get.

And how come nobody is jumping on the gold miners; why isn''t the Congress raking the gold mining people over the coals about the windfall profits they are making from the soaring price of gold; why don''t they bring gold back down to $30 an ounce like it used to be, instead of jumping all over the oil people

[scottyusa]

At this rate oil is going to be $150 a barrel next week. Oops sorry. Only kidding. Uh oh too late.

[beehive21-2009]

How is it that the establishment would under estimate the Americans,they are the verge of hell, with no return.

[incog-nito]

bm6005: A 100 mpg car may be hard to produce commercially, but a 50 mpg car that is practical to use every day has been done easily, a long time ago. With current technology you can probably get 60 or 70. Yes, people will have to do with less horsepower, but do they really need 300 hp on their commuter car?

[walt1944-2009]

It has been learned that "analysts" have determined that the price of oil will reach $200 a barrel in 2 years. This depressing prediction has sent the cost of oil today, even higher, which will mean at least a national average of $4.00/gallon by Memorial Day!

Not to be left behind in this unending bit of price manipulation, dairy farmers have predicted that the cost of milk will keep pace with the increases in gasoline, so that when you get gas at the gas station, you will need an equal amount of worthless paper dollars to buy a gallon of milk!

Those looking for "relief" from the never ending price gouging going on everywhere from the government of the Great Emperor Bush II will be greatly disappointed to learn that the Great Emperor refuses to do anything about it, denies that price gouging is going on, and states that citizens in the USSA have never had it so good! Especially the wealthy!

WHAT A GUY!!!!!

SIG HEIL, BUSH!!!!
sig heil, more of the same, McCain!!!!

[msay3]

Don''''t psychologists have a term for thinking something bad might happen, then subconsciously doing what it takes to make it happen for real?

Posted by hypnotoad72 at 04:42 PM : May 07, 2008
-------------------------------------------------
Yep...it''s called a self-fulfilled prophecy...

[mexinvasion]

Causing America to fall into another Great Depression is an efficient way to neutralize us. Rather than try to detonate a nuclear bomb Chicago, make America so poor it has to withdraw all its military back home.

[mediapreachr]

''The 21 st century, is going to produce exciting times,man reaching a boiling point greedy men are fanning the eruption ,watch you are about to witness a revolt, man revolting the greed of the greedy, its going to be exciting times,buckle up." For the times they are a changin."

Posted by beehive21 at 01:53 PM : May 07, 2008

I never thought I would live too see something akin to the Bastille revolt in the modern days.
Actually-"May you live in interesting times"-is an ancient chinese curse.

[hypnotoad72]

Don''t psychologists have a term for thinking something bad might happen, then subconsciously doing what it takes to make it happen for real?

[bm6005]

If you IDIOTS would stop telling everyone that the prices are going to go up the oil companies wouldn''''t push the up so quickly......
full of water that the new "Patented" process has shown 100 miles per 4 oz of water.
Posted by Consciousnes

Do you truly believe these scumbags need an excuse to raise prices? Don''t be naive! And the 100 mpg carb and the 100 mi/4 oz of water BS is just that. Impossible or only in the lab. There are only a certain amount of BTU''s per unit of gas, also known as there are NO perpetual motion machines. It''s physically (laws of Physics) impossible!!

[bm6005]

Who''s ready to join me in a march on D.C.? It''s time for shovels, pitchforks and torches. All to be used on our non-representatives, both in CONgress and the admin!

[bm6005]

you are about to witness a revolt, man revolting the greed of the greedy, its going to be exciting times,buckle up." For the times they are a changin."
Posted by beehive21

Voted best use of tax rebate "Buy more ammo"!!!

[Gary Kempf]

Total bullsheiit...When is this worthless govt. going to rein in these scumbag oil speculators.What is the bullsheeitt excuse going to be next week.....hurricanes?????


--------------------------------------------------------------------------------

Posted by b48151 at 02:06

They have exhausted every excuse, it will go up because they want it go up........ And no one (elected) that can stop it will......

[Gary Kempf]

Lets see does Goldman Sachs income grow every time oil goes up? So if they predict oil going up, isn''t to their advantage???????

[beehive21-2009]

The 21 st century, is going to produce exciting times,man reaching a boiling point greedy men are fanning the eruption ,watch you are about to witness a revolt, man revolting the greed of the greedy, its going to be exciting times,buckle up." For the times they are a changin."

[consciousnes]

If you IDIOTS would stop telling everyone that the prices are going to go up the oil companies wouldn''t push the up so quickly.
Again it is the media that is driving the situation, There is no shortage of oil in the world YET. The oil companies have just slowed down pumping.
Why worry about that when we have a world full of water that the new "Patented" process has shown 100 miles per 4 oz of water.
The oil companies are just trying to squeez every penny they can before the world finds out that they don''t need it any more. And they pay the media to hype it all.