Where Will Oil End 2009?

Includes: OIL, USO
by: Henrique Simoes

Is 2009 going to be an exciting year for oil? Institutional investors don`t think so. Their estimates are very similar - much of Wall Street expects oil prices to average about $50 a barrel in 2009. Some of the firms and their specific forecasts:

Deutsche Bank predicts an average price of $47.50 for all of 2009; the chief energy economist of Deutsche Bank, Adam Sieminski, said recently that the demand for oil in 2009 will drop more than any other time in the last quarter of a century due to the weak economy. Sieminski forecasts oil traded in New York falling as low as $30 and averaging $47.50 for the whole year.

Merrill Lynch has a very similar prediction, saying that prices will average $50 (but iif they could predict anything they would have remained independent...).

Moody’s Investors Service also says crude will average $50 a barrel in 2009.

Goldman Sachs is predicting that prices will average $45 for all of this year – but predict a a drop to $30 dolars a barrel in the first quarter. Yet Goldman just five months ago predicted oil prices would hit $200 a barrel in 2009.

Marc Faber doesn`t make any specific price prediction, but is buying oil at these prices.

The Energy Information Administration projects crude oil will trade at an average of $51 a barrel in 2009.

Barclays Capital has given its forecast of $76 a barrel average for U.S. crude in 2009, saying improving demand and a supply slide will combine to lift oil prices. The forecast is more than $17 above a consensus $58.48 dollars a barrel in the most recent Reuters poll and was among the highest in the survey of 30 analysts.

Morgan Stanley predicts $82 for 2009. Morgan Stanley is the most bullish investment house on the Street.

Jim Rogers says that oil will reach $200 a barrel by 2013.

Bloomberg Consensus: Oil futures may rebound from their worst year to average $60 a barrel next year. The forecast is the median of 33 analysts compiled by Bloomberg.

The Oil Traders Blog price projection for the end of 2009 is $60 to $70 a barrel, based on a sample of 350 retail investors.

I predict 85 dollars a barrel for the end of 2009. Most of the move will be a direct consequence of the money printing scheme the Fed put on, which caused the dollar to fall. Demand will remain weak, which can depress prices in Q1 and Q2, but it will surely rebound later in the year.