Goldman Sachs: Gasoline Not Driving Oil Price 7 comments
-
Font Size:
-
Print
- TweetThis
Normally, I don't care for predictions, but considering this was the fellow who in 2005 said there could be a "super spike" in crude, let's see what he has to say (I am on record as saying a "World of Shortages" theme combined with Western governments flooding the world with fiat paper can only combine to ultimately create higher prices). These are the first people (along with Cramer - have to give him kudos) who finally are realizing that the world does not revolve around the United States of Subprime; a position I've been advocating for a long while. The quicker we move away from our country-centric views, the better.
- U.S. gasoline is no longer the leading fundamental driving oil markets, according to a report penned by Arjun Murti of Goldman Sachs Tuesday. Murti who famously predicted the dawn of the “super spike” back in March 2005, says this dramatic shift could have meaningful implications for the energy markets.
- As the world’s thirstiest oil market, the health of the U.S. gasoline consumer has traditionally always led oil markets up or down. But Murti’s team, which Tuesday raised oil price targets to between $150-$200 from a $120 for the next 6-24 months, now believes the relationship could be becoming unstuck.
- “Gasoline, at least in the short-run, has traded more like an annoying by-product of crude than as its core fundamental driver,” Goldman’s report said. “Weakness in U.S. gasoline margins is not the surprise… the surprise is that the weakness not only has not mattered to crude oil markets, but if anything, is helping to keep oil supply/demand in balance.”
- Meanwhile Murti says demand for middle distillates, like diesel, gasoil, heating oil and jet fuel and kerosene is racing up.
- Murti attributes that strength to resilient non-OECD demand growth as well as numerous global power problems, all of which have led to increased usage of diesel and gasoil-fired generators. Underpinning that pressure is a lack of adequate supply growth resulting in needed demand rationing in OECD areas and in particular the United States.
- But other oil traders agree with Murti’s analysis. It’s tightness in the so-called middle part of the barrel that is sending oil prices higher. U.S. gasoline consumption patterns are no longer relevant.
- “High crude oil prices despite weak U.S. gasoline cracks is sending the signal that global oil markets do not need or perhaps want the U.S. gasoline consumer to recover,” Goldman’s report writes.
- The soaring price of middle distillates meanwhile picture paints a bleak outlook for the airline industry. [Apr 8: Now on to Airline Inflation]
As your dollar becomes more worthless, buy those meats now and freeze them, and get those airline tickets bought now before fares really take off, etc etc etc - inflation is not a problem... unless you live and breathe. This is one way to get the US consumer spending again - realizing his peso will be more worthless by the hour.
Related Articles
|



























This article has 7 comments:
One should never sell the US too short. (Since I am not american i can say that without any patriotic feelings.)
As the author says: We are in a global competition for resources. This competition will not just be decided by economic issues, but also by military power.
That's why the EUR/USD trade was a joke and I am happy to see that bubble deflating. In my opinion it should be the other way around.
There is not one European nation able or willing to secure their trade routes. Their silly diplomatic talk may draw applause by the wimps of the world, but it means nothing - poetry socialists may like it or not.
Nice article. I guess one of the most glaring disappointments of the Bush presidency (I voted for him twice) is that as an "energy guy" here was the chance to craft a sensible energy policy that would address the concerns you talk about in your article. I am afraid W dropped the ball bigtime on this issue. A missed opportunity for sure. And I am afraid that as the "sands slip through the hourglass" we are fast running out of time to get our energy house in order. This is like a cut that goes untreated. Left alone it becomes infected and eventually destroys the affected area. We have to get serious about energy NOW. We don't have the luxury of "fiddling" while Rome burns.
I almost choked on my coffee when I read that
Any indication by US or Japanese/European/Chin... car manufacturers turn to batteries by a small fraction it will bring boiling oil to cooler climes.