Goldman Sachs calls for $140 oil in 2012

[Purple Glow]

http://finance.yahoo.com/news/Oil-ri...&asset=&ccode=

I'm not sure who will be the republican nominee in 2012, but they are going to have a field day with this, asking why are we bombing Libya when not only is it NOT in our interest, but it is disrupting the oil supply chain. Obama is driving oil prices higher for no good reason at all, and I think he will be a one-term president for it. The only way to protect ourselves from Obama's policies is to invest in oil ourselves, as Goldman Sachs suggests.

Oil rises to near $99 as Goldman boosts forecasts
Oil rises to near $99 in Europe after Goldman boosts forecasts on supply concerns

On Tuesday May 24, 2011, 7:51 am EDT

Oil prices inched up closer to $99 a barrel Tuesday after Goldman Sachs raised its crude forecasts on concern the shutdown of Libyan output will drain spare OPEC supplies.

By early afternoon in Europe, benchmark oil for July delivery was up 87 cents to $98.57 a barrel in electronic trading on the New York Mercantile Exchange. In London, Brent crude for July delivery was up $1.15 to $111.25 a barrel on the ICE Futures exchange.

Goldman said it expects Brent will rise to $140 by the end of next year, higher than the investment bank's previous forecast of $120. A civil conflict in Libya has shut down almost all the country's 1.6 million barrels a day of oil production, and Goldman expects that loss to global supply will eventually push prices higher.

"We expect that the ongoing loss of Libyan crude oil production and disappointing non-OPEC production will continue to tighten the oil market," Goldman said in a report. "It's only a matter of time until inventories and OPEC spare capacity will become effectively exhausted, requiring higher oil prices to restrain demand."

Other analysts are more pessimistic about global crude demand. Slowing economic growth in the U.S., Europe and China will likely hurt oil consumption and push oil prices down in the second half, said Richard Soultanian of NUS Consulting, who expects crude to average $88 in the fourth quarter.

The benchmark contract lost $2.40 to settle at $97.70 on Monday as the dollar strengthened amid growing investor concern about Europe's debt crisis. Crude also fell on fears China's economic expansion is slowing after Platts, the energy information arm of McGraw-Hill Cos., reported that growth in crude consumption fell in April.

Oil has dropped from a 30-month high near $115 a barrel on May 2.

"The risk of a significant pullback in both the commodities and equities markets is uncomfortably high," Soultanian said. "The decline in the past weeks is the canary in the coal mine indicating that energy markets will undergo a more sustained and consistent decline in the coming months."

The market will is also awaiting fresh information on U.S. stockpiles of crude and refined products.

Data for the week ending May 20 is expected to show a draw of 1.6 million barrels in crude oil stocks and a rise of 750,000 barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

"Refineries are likely to gradually step up their low utilization at present in view of the upcoming driving season and the strong depletion of gasoline stocks, which should also support a reduction in inventories," said analysts at Commerzbank in Frankfurt. "For the substantial overhang in stocks to disappear, it will take an inventory reduction over several weeks though."

The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration -- the market benchmark -- will be out on Wednesday.

[Kalyyn]

drilling at home solves everything, sir.

[jarmale]

people just need to step away from oil before its tolate

[Azrile]

Obama is going to win 54-46 (which is a landslide in presidential elections). The fundraising power of a sitting President is too much to overcome. Everybody knows it which is why all the known Republican names are dropping out. The Rep candidate will be someone unknown, who will then become well-known and use that popularity to make millions in the years to come doing speeches for the 46% who voted for him.

[ShamStuffa]

drilling at home solves everything, sir.

Totally agree, start drilling at home so we can stop wasting so much fucking money in foreign oil, and then we can put that money towards developing more efficient energy sources.

So much more could be accomplished if we could do that, and its not as if there isn't any oil in America. Could be a big help in the job economy as well.

But look at Canada, they have primarily home drilling and there gas is about a dollars less than here, plus at has A LOT less of the fluctuation that we have here from all this fucking speculation.

[Zamfix]

Not to mention a good number of the Republican candidates are batshit crazy and only appeal to a fringe minority.

[Rackfu]

Totally agree, start drilling at home so we can stop wasting so much fucking money in foreign oil, and then we can put that money towards developing more efficient energy sources.

So much more could be accomplished if we could do that, and its not as if there isn't any oil in America. Could be a big help in the job economy as well.

But look at Canada, they have primarily home drilling and there gas is about a dollars less than here, plus at has A LOT less of the fluctuation that we have here from all this fucking speculation.

You all realize that the less oil we buy from OPEC, the more they charge for it, right?

Until we can find a way to curb our addiction (because we cannot produce enough on our own to satisfy our needs), the price is never going down.

OPEC controls the market. If we produce 20% more oil in the US, they will just up their price to make up for the loss.

[Deleted]

Freedom for the people in libya is more important to me then paying a few extra dollorz for some oil

[Deleted]

I'm not American - I'm British - but I strongly believe that the western countries should stay out of foreign affairs until they fix the mess within their own countries. Many citizens already struggle to make ends meet here in the UK, with essential supplies constantly rising in cost. Add that to the ridiculous levels of unemployment and there's certainly enough fuel (no pun intended) for a massive crisis over here.

[cncrules45]

While I wouldn't have handled the Libya situation the same way, when we are engaged in humanitarian crisis, the price of oil can be damned. Furthermore, we can't allow the size of a dictator's oil reserves dictate our foreign policy. Similarly, I disagree with the decision to go into Iraq, but that has absolutely nothing to do with how the war affected oil.

[Deleted]

People need to wake up. The west isn't getting involved for 'humanitarian' reasons. If they were, they'd be treating their own people with a bit more respect instead of cutting essential funding and services. Furthermore, there are worse countries than Libya that the west turns a blind eye to. It just happens to be an easy target.

[Zehroh]

Western countries need to take an example of China. They also drill in African countries but you hardly hear about it. Reason is because China doesn't get involved in political affairs. The main reason is that China invests in the infrastructure, so those countries benefit of their presence.
As far as I'm concerned, the western countries don't do shit.

[grimsanta]

#1. So let me get this straight, it's Obama's fault that the Libya disaster started? And it's Obama's fault that NATO responded? I was pretty sure that it started with revolts and protests, and then the French and Italians started the NATO push. So yeah, while we are part of the NATO mission, we're not responsible for all of this. We have a commitment to NATO, are you saying we just tell our allies to go to hell?

#2. Even if Obama did do this, supporting rebels against a dictator who has decided to fire and go to war against his own people, at the cost of higher oil prices is ok with me. I don't agree in starting wars (Iraq), but when rebels stand up for freedom, and ask for the west's help (and many rebels DID), I think we should stand with them in fighting against terror and repression. Try telling one of those rebels face to face that they can all die and be raped and murdered because you don't want to pay a higher price at the pump.

#3. For those saying drilling here is a viable option, and whoever said that canada does it, are completely ill informed. We don't have enough oil here to make a dent in oil prices. Most of the oil we haven't exploited is hard to get to anyways, and must be sold at a high price to justify the drilling in the first place. The idea that we should continue deep water drilling before we have a sound method to fix a leak is the dumbest idea ever. That's like saying that we should go to the moon, but when we get there, we have no way to get back, and we'll just figure it out on the way.

People seem to think that the US's natural resources belong to the US. Well they don't. We live in a capitalist country, so they belong to the oil company who drills the oil. It is sold at the market price, and since oil is a world commodity, it is sold at that price. Adding more oil to the market will increase supply initially, and then opec will cut production and oil will stay the same. The only thing that changes oil prices is demand relative to supply, not supply relative to demand, because supply can be manipulated by OPEC.

---------- Post added 2011-05-24 at 09:30 AM ----------

Western countries need to take an example of China. They also drill in African countries but you hardly hear about it. Reason is because China doesn't get involved in political affairs. The main reason is that China invests in the infrastructure, so those countries benefit of their presence.
As far as I'm concerned, the western countries don't do shit.

Those countries do not benefit from China's presence. They bring in chinese workers, reap all the natural resources, and pay a very small price to the government or land owner. They import goods from China, for the Chinese workers, and so there is roughly no benefit other than the cost to rent the land they are on. There are exceptions where China has had to have more investment in the country they are mining/drilling, but for the most part, they do not benefit the country they've gone too. This is a complete and utter myth.

[Paranoid Android]

First off, I love getting my oil futures from MMO-Champ. Second the OP's "fair and balance" opion on Libya and Obama is a little skewed. United States is more in a support role than say invading a country and driving up oil prices? I will agree no matter who is in office the public will always blame the high price of oil or cost living on current administration.

What I dont think the OP wants to admit again is that it is out of Obama's hand more or less because it is largely based on oil speculators, i.e. traders and the stock market for driving up oil prices than conflicts or regional wars (unless a world war). Also the unrest in other mideast/arab countries with revolution does not help. Add that most of our oil comes from mideast and they can dictacte price also drives it up and last but not least good ole economic supply and demand.

As far as drill baby drill. Well I'm gonna leave that one alone and more or less say we should find better, cleaner alternative fuels than dependence on foreign oil.

[Onshava]

#1. So let me get this straight, it's Obama's fault that the Libya disaster started? And it's Obama's fault that NATO responded? I was pretty sure that it started with revolts and protests, and then the French and Italians started the NATO push. So yeah, while we are part of the NATO mission, we're not responsible for all of this. We have a commitment to NATO, are you saying we just tell our allies to go to hell?

#2. Even if Obama did do this, supporting rebels against a dictator who has decided to fire and go to war against his own people, at the cost of higher oil prices is ok with me. I don't agree in starting wars (Iraq), but when rebels stand up for freedom, and ask for the west's help (and many rebels DID), I think we should stand with them in fighting against terror and repression. Try telling one of those rebels face to face that they can all die and be raped and murdered because you don't want to pay a higher price at the pump.

#3. For those saying drilling here is a viable option, and whoever said that canada does it, are completely ill informed. We don't have enough oil here to make a dent in oil prices. Most of the oil we haven't exploited is hard to get to anyways, and must be sold at a high price to justify the drilling in the first place. The idea that we should continue deep water drilling before we have a sound method to fix a leak is the dumbest idea ever. That's like saying that we should go to the moon, but when we get there, we have no way to get back, and we'll just figure it out on the way.

People seem to think that the US's natural resources belong to the US. Well they don't. We live in a capitalist country, so they belong to the oil company who drills the oil. It is sold at the market price, and since oil is a world commodity, it is sold at that price. Adding more oil to the market will increase supply initially, and then opec will cut production and oil will stay the same. The only thing that changes oil prices is demand relative to supply, not supply relative to demand, because supply can be manipulated by OPEC.

---------- Post added 2011-05-24 at 09:30 AM ----------



Those countries do not benefit from China's presence. They bring in chinese workers, reap all the natural resources, and pay a very small price to the government or land owner. They import goods from China, for the Chinese workers, and so there is roughly no benefit other than the cost to rent the land they are on. There are exceptions where China has had to have more investment in the country they are mining/drilling, but for the most part, they do not benefit the country they've gone too. This is a complete and utter myth.

So a viable alternative would be? I'm all for reading different people's opinions (it's the only way to become better informed), but I severely dislike it when people junk all over others' information, but offer no response solutions, though, reading your post, I'd assume it'd look something like, "What we need to do is simply do away with our oil dependency, invest in greener, alternative energies, and say no to crude." By the way, call me an ignorant American, but I've seen and read ad slogans from Canadian oil producers talking about their domestic oil production and selling it to lower prices in America. If you have something to rebuke this, please link so I can read it.

Truth of the matter is, while we will eventually have to get off of oil, it's impossible to do so now. America is like a critical care patient on oxygen. Eventually, they'll need to be taken off of it, but if you do that now, they'll simply die. There are hardworking families who need reprieve from the rising oil prices. Families that have to drive in order to work the only job they were able attain. What are they to do? Stop driving? Scrimp on groceries? "Sorry kids, only dinner today." Oil may be a world commodity, but anything produced by an American company on American shores can be sold to American consumers for less. While not the best option, lifting the oil drilling ban and re-establishing the Bush given oil permits is quickly becoming the only way of bringing down the price of oil.

[Rukh]

So we should be BFFs with them because they have oil? We should be friends with murderous dictators if its beneficial to us? Please oh please let Republicans run on this in 2012.

[grimsanta]

So a viable alternative would be? I'm all for reading different people's opinions (it's the only way to become better informed), but I severely dislike it when people junk all over others' information, but offer no response solutions, though, reading your post, I'd assume it'd look something like, "What we need to do is simply do away with our oil dependency, invest in greener, alternative energies, and say no to crude." By the way, call me an ignorant American, but I've seen and read ad slogans from Canadian oil producers talking about their domestic oil production and selling it to lower prices in America. If you have something to rebuke this, please link so I can read it.

Truth of the matter is, while we will eventually have to get off of oil, it's impossible to do so now. America is like a critical care patient on oxygen. Eventually, they'll need to be taken off of it, but if you do that now, they'll simply die. There are hardworking families who need reprieve from the rising oil prices. Families that have to drive in order to work the only job they were able attain. What are they to do? Stop driving? Scrimp on groceries? "Sorry kids, only dinner today." Oil may be a world commodity, but anything produced by an American company on American shores can be sold to American consumers for less. While not the best option, lifting the oil drilling ban and re-establishing the Bush given oil permits is quickly becoming the only way of bringing down the price of oil.

The only reason that North American oil is sold for less here is transportation cost for transporting the oil itself. The discounts are matched to the market price, so once again, more oil production here will only lead to production cuts from OPEC. This does nothing to solve oil prices. Oil was just as high a few years ago under bush when we were expanding drilling like crazy. Do you remember the summer of 2008?

I like how you say for me to point out solutions instead of just crapping all over others, but all you've said is that we need to drill more. Like I said, oil prices rose in the latter Bush years when we were expanding drilling, and they stayed stable during the Clinton years where our production was roughly stable as well. It's a limited resource, and one that OPEC has control over production, so how many times do I need to say that this is not a viable solution? And yes, long term we will need to develop more fuels and renewable energies.

Just because I point out someone's flawed logic doesn't mean that I have to put up a solution. The problem tends to be with international speculation, and OPEC working as a cartel. Neither of which we have any control over.

And of course families are struggling because of gas prices. But whenever we try to develop things like rail, or better public transportation in our cities, or highspeed rail in our country, it's blocked by the right. These would help immensly, as they have around the world. But it's too big of a cost for any one company to work on, so it isn't done.

Market forces don't solve everything, but yes, government intervention when it comes to expanding public transportation would be a huge boon to our ability to get around. But no, let's not do that, because that would be "socialism" oooh, scary word.

Please, now that you've attacked my information, please provide a solution, or just keep being a hypocrite.

[conscript]

I love that a country that produces 2% of the world's daily oil production can apparently drive up the price by a ridiculous amount. Oil speculation is 100% bullshit. The price rises because they say it does, not because there is a dwindling supply due to oil actually running out. Yes OPEC can tighten the tap a bit and control the cost, but they should never be able to alter it by the ridiculous 30-40% swings in prices we constantly see.

[Deleted]

I'm not American - I'm British - but I strongly believe that the western countries should stay out of foreign affairs until they fix the mess within their own countries. Many citizens already struggle to make ends meet here in the UK, with essential supplies constantly rising in cost. Add that to the ridiculous levels of unemployment and there's certainly enough fuel (no pun intended) for a massive crisis over here.

Sorry but I hear this opinion drummed out every freaking time, and it is so completely wrong.

When the entire developed world is based around Globalisation, *NOT getting involved in foreign affairs gets you into even worse predicaments. The Financial crisis which you are saying caused such problems, can originally be sourced from China, which then carried into the US and then the rest of the world.

In order to stop such problems happening in the first place, we actively need to work and get involved in foreign affairs and the rest of the world, or be left behind. Our economy is almost completely carried by the financial sector operating in and around London, our manufacturing industry is minimal. Everything therefore, from domestic goods and basics like food, to luxury items like cars, are all priced as a result of foreign influences rather than our own.

Now let's put this in context - while many disagree about the Libya conflict, not getting involved completely goes against some of the fundamental principles of international bodies like the UN.

What differs this conflict from others, is that Gaddafi effectively stated that he would murder every single one of the rebels opposing him (paraphrased). Other situations around the world where rebels rose up and were fought off by governmental forces did not have military intervention in the same way, as those in charge did not explicitly state their intentions for genocide or mass killings of people based purely on their political beliefs.

I think the best summary to the dilemma came from a member of parliament on Question Time when it was full swing. The topic they were discussing was whether or not it was right that Britain should play a part militarily. This man simply stated that had we, and the world as a whole done absoloutely nothing, the topic of discussion they would instead be debating was as to why we didn't intervene.

[conscript]

And of course families are struggling because of gas prices. But whenever we try to develop things like rail, or better public transportation in our cities, or highspeed rail in our country, it's blocked by the right. These would help immensly, as they have around the world. But it's too big of a cost for any one company to work on, so it isn't done.

The recent attempts at putting money into high speed rail were blocked because there is simply no compromise on where the money is coming from. Everyone wants to just write a check for this or write a check for that without ever considering what is in the bank. When we are trillions in debt, inevitably facing increased taxes, and with a government that can't get their heads out of their own asses to work across party lines for two seconds to get even a simple budget done, I don't think it is exactly the write time to write a check for $8 billion, which will inevitably end up costing far more just like every government expenditure, for some trains that aren't going to do anything for the vast majority of the country. The countries where high speed rail is a success have largely concentrated populations. The US really doesn't have that. We are a country that is a collection of 50 states that are in some cases bigger than some countries around the world with a much, much less condensed population. The amount of money that would have to be poured into a high speed rail system for it to benefit our country the way it does China, Japan, or some European countries would be astronomical. It would work well on the East coast for New York, Boston, Philly, etc. It would even serve a purpose to connect those cities to Chicago, St Louis, and eventually the West Coast, but for high speed rail to become any sort of a viable transportation network, there would need to be so, so many rails built to connect locations as our population is spread out across the vast majority of the country.

Not relating to your post: What is with all the blaming Libya on Obama? Do people honestly think the US chose to "invade" Libya or that they alone make decisions for NATO? The aerial or naval bombings of Libya are a NATO coalition mission not even led by the US. The US is simply there because they are bound by their agreement just like NATO forces were there for coalition attacks in Afghanistan and Iraq. Frankly, if it was the US leading this attack it would have been over by now or at least closer to a resolution. The inability to use ground forces in the country is completely hampering the mission and is creating more havoc. The NATO forces can take all the shots they want at trying to scare Gadhafi into backing off and stepping down, but until they actually put one in his lap and he explodes, they can't stop the shelling of several rebel-held cities around the country. If the Libyan forces are entrenched or are located in civilian areas performing their persistent mortar attacks, there isn't jack shit NATO can do. As soon as one NATO missile goes astray and kills an innocent civilian everyone is all over them about it. The same goes for the US killing a civilian in Iraq or Afghanistan. As soon as it happens, the anti-war portion of the world media is all up in arms about the use of force. Never mind that the Libyan military is killing hundreds of their own civilians at will or a terrorist is killing dozens of innocent women and children in a fruit market. Nope the real crime is when the outside forces of the US or NATO kill one innocent person with a stray bullet.