Where Will Oil Go from Here? Goldman Says $45, Iran Says $100

Goldman "Downgrades" Oil to $45

Goldman Sachs, one of the largest energy traders in the markets, lowered its 2009 price forecast for crude oil to $45 a barrel. Goldman Sachs' last estimate for 2009 was 40% higher.

"We revise down our 2009-2011 crude oil price forecasts in view of a more severe than expected deterioration in oil demand globally," Goldman Sachs analysts wrote on the report.

Goldman predicts that crude oil futures will trade at an average of 30 dollars a barrel in the first quarter of 2009. Goldman once was the most bullish investment house on the street. They are throwing the towel on oil now (read full article).

Iran Thinks the "Real Price" of Oil Is $100

Iran's oil minister said he considered the "real price" for a barrel of crude should be more than $100 and a senior Iranian official said OPEC needed to cut oversupply from the market, Iranian media reported on Saturday (read full article). This is what is call wishful thinking.

Oil: Where To?

But where will oil go from here? In the short term, the Oil Traders Blog projection is that oil may rebound a little further, benefiting from the dollar weakness. $50 a barrel is certainly feasible this week.

OPEC should be a non-event. Nobody real believes OPEC might really cut production even if they announce a big cut. They need to sell all the oil they can to balance their budgets.

Disclosure: no positions

Comments

[Hedged In:]

I'm not sure who has more credibility right now -- Goldman Sachs or Iran.
:-)

2008 Dec 14 08:41 AM

[herbert hoover:]

I predict that Goldman Sachs share price will be less than a barrel of oil in 2009. Can I write an meaningless article too?

2008 Dec 14 09:10 AM

[Ishortyou:]

I wonder why we let our brain washed concept that only oil is the way to move around when we have already new age green technologies that need to be implemented in mass scaled?

2008 Dec 14 09:50 AM

[Prudent Man...:]

What happened to Goldman's $200.00 estimate for this year? Is it with the Ivy League prof who predicted DOW 30,000. I don't hear or see Bloomberg, WSJ, CNBC calling these robber barons to task. They don't have the testicular fortitude to go up against Goldman, the invisible black hand of the U.S. Congress and Administration - regardless of party.

2008 Dec 14 11:20 AM

[jepittman:]

Have at it HH. I would love to read something in depth from you.


On Dec 14 09:10 AM Herbert Hoover wrote:

> I predict that Goldman Sachs share price will be less than a barrel
> of oil in 2009. Can I write an meaningless article too?

2008 Dec 14 07:57 PM

[famos:]

Dear Ishortyou,

I hate to tell you, if we couldn't use oil/diesel for transportation and had to wait for "new age green technologies" you'd starve or freeze to death in the process.

famos, for the last word.

2008 Dec 15 09:50 AM

[Ferdinand E...:]

Interesting to hear - about GS I mean. Oil is scarce, given the demand for it that will be experienced when the global macroeconomy gets on its feet again. Until that time NOBODY knows what is going to happen to its price.

About "green technologies", mentioned by someone above. President-elect Obama is apparently in the process of installing a green team to handle his energy business, If he doesn't change his mind, then I would call this intention the first big mistake of his presidency. Let's hope that he doesn't make any more.,

2008 Dec 15 10:10 AM

[SivBum:]

They're trying to rewrite history...not lower by 40%, unless Wall Street math for $200 to $45 is -40%.

www.matternetwork.com/...

2008 Dec 15 11:06 AM

[NOWHEREMAN:]

Obama is being painted into a corner. His top advisors are all Old School. Will he be able to act on his mandate is the question.

If his pronouncements on the Stimulus Package are allowed to proceed, the new GS target will never be seen.

Personally, I think it was a ploy to allow GS and MER and others of their ilk to get in on the ground floor with the expectation of enormous profit, just like they did as GS and MS made their own upward predictions while the
US was already in a recession.

Green is good and this is the best time to stockpile the necessary materials to implement a Green Policy while prices are low.

2008 Dec 15 11:53 AM

[Crude Oil T...:]

These statements by Iran and cuts by OPEC are great for those of us day trading crude and we already had the OPEC cut trade this morning in my opinion. We got that jump with the DXO and it looks like it is over. The American, and now the Chinese, consumer is the only ones that ultimately will dictate the price of oil. We are still cautious with our shorting positions with crude though. On days it runs up 10%, it's a no brainer, traders will take profits and you can ride the DTO down. But only as a day trade.

Good luck out there!

2008 Dec 15 12:40 PM