|
Goldman Sachs says oil may be in early stages of ‘super spike,’ prices could go as high as $105 a barrel
Crude oil prices rose April 1, boosted by rising prices for gasoline and heating oil, as well as an investment bank report saying strong demand and tight supplies could cause a “super spike” in prices.
Light, sweet crude for May delivery on the New York Mercantile Exchange rose 30 cents to $55.70 a barrel in electronic trading by afternoon in Europe, after gaining $1.41 on April 31.
Brent crude futures rose 59 cents to $54.88 a barrel on the International Petroleum Exchange, after surging $2.20 a day earlier.
Goldman Sachs, a major trader in the energy markets, said in its report that “oil markets may have entered the early stages of what we have referred to as a ‘super spike’ period — a multi-year trading band of oil prices high enough to meaningfully reduce energy consumption and recreate a spare capacity cushion only after which will lower energy prices return.”
Goldman Sachs analyst Arjun Murti said factors contributing to the run-up in prices include geopolitical turmoil in oil-producing countries. The report said prices could go as high as $105 a barrel. Analyst: confluence of many events required Oil analyst Victor Shum of Texas-based Purvin & Gertz in Singapore said the chances of crude oil reaching that level were slim.
“It will take a confluence of many events to happen,” he said. “For example, if oil reserves in Saudi Arabia were significantly destroyed, then we could see a spike.”
While oil prices are roughly 47 percent higher than a year ago, Nymex futures would need to surpass $90 a barrel to approach the inflation-adjusted high set in 1980.
On March 30, heating oil futures settled more than 5 cents higher and gasoline futures closed more than 2 cents higher following the release of U.S. government data that showed a drop in the U.S. supply of gasoline and distillate fuel, which includes heating oil. The U.S. government also reported a large increase in crude oil inventories, and said gasoline demand over the past month was 2 percent higher than last year.
Despite the current bullish factors, Shum said he believes prices will fall because of the rise in crude inventories and a second-quarter drop in global oil demand.
He said the present speculative fund-buying arose out of a “frenzy mentality.”
“People will continue to take profits because much of the surge was driven by no news,” Shum said.
—The Associated Press
| 