Goldman Estimates Lost Libyan Production Would Require Over Half Of Spare OPEC Capacity To Replace Yet Lowers WTI Target To $97.50

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Tue, 02/22/2011 - 13:54 | 985846 buzzsaw99
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May 16, 2008:

NEW YORK (MarketWatch) -- Goldman Sachs once again issued a provocative forecast for the price of crude oil Friday, saying a barrel is likely to average $141 over the second half of the year -- a further 10% or so above the latest in what's been a string of record highs.

Making their projection on the same day that Saudi Arabia -- the world's biggest oil producer -- declined to raise output and that crude futures crested near $128 a barrel for the first time, Goldman commodities analysts Jeffrey Currie, Giovanni Serio, David Greely, Allison Nathan and Samantha Dart said the oil market appears to be in the midst of a historic repricing...

Tue, 02/22/2011 - 13:58 | 985856 LawsofPhysics
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Priceless.  Now GS claims to be an expert on history.  Too funny.

Tue, 02/22/2011 - 14:16 | 985913 Thomas
Thomas's picture

I find it odd that the spread hit records decidedly before the shit hit the fan. Makes ya wonder who knew what when.

Tue, 02/22/2011 - 14:49 | 985982 malikai
malikai's picture

Who is/was the hedge fund that had all the big shorts blown out during the 08 parabola? I'm looking to study the event.

Also, Gail the Actuary at The Oil Drum just wrote posted a writeup on the Brent/WTI spread. Some possible solutions to the anomaly are mentioned.

Tue, 02/22/2011 - 13:55 | 985848 tellsometruth
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stfu gs

Tue, 02/22/2011 - 13:55 | 985849 Instant Karma
Instant Karma's picture

What is Goldman's estimate for oil when the Saudi's fall to the revolutionaries?

Tue, 02/22/2011 - 14:01 | 985865 Instant Karma
Instant Karma's picture

At least the Fed can sell some bonds today.

Tue, 02/22/2011 - 14:07 | 985895 topcallingtroll
topcallingtroll's picture

The game is not over yet. Treasuries and bennie live to fight another day. The bottom may be in for the dollar for a while. Slow devaluation and slow rise in treasuries means bennie has a chance to win.

Tue, 02/22/2011 - 14:02 | 985866 baby_BLYTHE
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I just don't want to live through a Second Great Depression.

The market has doubled off the lows. Did Bernanke really fail?

Or is he just the man we all love to hate?

Tue, 02/22/2011 - 14:03 | 985872 ivars
ivars's picture

Sure. There is no cure for such scale bubble crisis other than living through the consequences.

Tue, 02/22/2011 - 14:04 | 985879 topcallingtroll
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We have been blessed to live in interesting times.

Tue, 02/22/2011 - 15:25 | 986105 tj3
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Truth to Power

Tue, 02/22/2011 - 14:01 | 985868 ivars
ivars's picture

More like 130 USD Brent on 6 month horizon, and 160 USD on 12 months.

Tue, 02/22/2011 - 14:02 | 985870 Ayn Rand
Ayn Rand's picture

Even if they are wrong at $141, the price ain't going down from here..

Tue, 02/22/2011 - 14:03 | 985873 topcallingtroll
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Does anyone know the grade of libyan crude? If it is light sweet crude then probably it cant be replaced by spare opec capacity which is heavy sour. Only certain refineries can crack heavy sour.

Tue, 02/22/2011 - 14:07 | 985886 tellsometruth
tellsometruth's picture

good question, wish i knew...who does?

Tue, 02/22/2011 - 14:08 | 985893 Instant Karma
Instant Karma's picture

I heard it was the good stuff

Tue, 02/22/2011 - 14:16 | 985910 tonyw
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Libyan oil is generally light (high API gravity) and sweet (low sulfur content), but can also be thick and waxy. The country's nine export grades have API gravities that range from 26o – 44o. While the lighter, sweeter grades are generally sold to Europe, the heavier crude oils are often exported to Asian markets. Most Libyan oil is sold on a term basis, including to the country's Oilinvest marketing network in Europe; to companies like Agip, OMV, Repsol YPF, Tupras, CEPSA, and Total; and small volumes to Asian and South African companies.


Does this help you mr troll

Tue, 02/22/2011 - 14:07 | 985894 Oh regional Indian
Oh regional Indian's picture

Good to see the petra-oleum complex dis-integrate. The pain had to be borne by some generation. Might as well be us. So we can innovate. Genuinely innovate. Not this incremental form-oriented crap that has us slave to explosion.


Tue, 02/22/2011 - 14:12 | 985905 jus_lite_reading
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Wisconsin was first. Now see the anger spread to Indiana, Michigan, Ohio...

BTW, where is Lloyd today? I'd venture to say, he's packed his bags and headed towards the bunker...

Tue, 02/22/2011 - 14:18 | 985915 koot
koot's picture

At what dollar price level in oil does demand in US actually begin to show decline?  Past studies show that consumption does not decline substantially and especially until prices reach net negative returns on most business.  Individuals reduce consumption slighly sooner as their bottom line is impacted accordingly, but cost carry to business shows up in consumer prices.

We all have heard the Peak Oil concept, but it is more a peak cost and price factor than a supply.  Cheap oil production is declining, but it is not just the fact that the most economical oil available is declining, but also the fact that currencies and their government proxies are declining which both cause and results from events like Egypt and Libya.  Fourth turning stuff or whatever one calls it, but the fact that too many people  do not realize what truly is important in life only means things will get much worse before any chance for the better.  I wish it were not so, but afraid it is meant to be.

Tue, 02/22/2011 - 14:22 | 985929 malikai
malikai's picture

This is easily explained: You can't eat oil, so it can't be priced too dearly.

Tue, 02/22/2011 - 14:40 | 985971 Pure Evil
Pure Evil's picture

You can eat oil, just have an infinite supply of 'tighty whities' on hand.

Castor Oil - When only the best in explosive diarrhea is expected.

Olestra - The other momentus bowl movement maker.

Tue, 02/22/2011 - 15:39 | 986135 Fíréan
Fíréan's picture
by malikai in reply to your comment You can't eat oil. You can't eat it yet it is extremely important in the food change, processing of processed foods and in the delivery of all foods.
Tue, 02/22/2011 - 14:24 | 985932 Buyemall
Buyemall's picture

I hope you post gs weekly kickstart on sunday , i think there might be some changes there as well.

Shock from the middle east is what el erian calls it.

Tue, 02/22/2011 - 14:26 | 985941 bugs_
bugs_'s picture

Could Goldman be....oh you already said it.

Tue, 02/22/2011 - 14:39 | 985974 batting500
batting500's picture

Check out page 4 of the report the line labeled:

Precious Metals...London Silver...


They have the price dropping in the 3 month forecast, even though at the same time they have the price of gold moving up.  Just an interesting thing that caught my eye.


Good Luck...

Tue, 02/22/2011 - 14:58 | 986046 Dr. Porkchop
Dr. Porkchop's picture

From CNN Money story:


Relax, Libya oil crisis is no big deal - watchdog

"We have strategic stockpiles of 1.6 billion barrels and I know that OPEC has a good spare capacity," IEA chief Nabuo Tanaka told reporters at an OPEC oil ministers meeting in Saudi Arabia.


The IEA says everything is fine. BTFD.



Tue, 02/22/2011 - 18:12 | 986591 hardcleareye
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IEA SAYS "Don't Worry Be Happy"

Tue, 02/22/2011 - 15:21 | 986090 CrashisOptimistic
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They simply do not understand.  They take IEA projections at face value, and the IEA's budget requires them to accept local government projections.  Christ, they still expect 13 mbpd out of Iraq by 2014 (they're at 2 mbpd now) when damn near anyone even remotely up to date on oil can tell them the Iraqi oil ministry is fucking insane.

They do not understand and they are going to get a lot of people killed.

They also need to get better calibrated on "all liquids" vs "crude and condensate".  All liquids are being lumped in to hide the problem with C&C.  All liquids do not have anywhere near C&C's energy density.  You can't pour their refined result gallon for gallon into your gas tank.

Tue, 02/22/2011 - 18:00 | 986559 hardcleareye
hardcleareye's picture

Yup, you got it right. 

Tue, 02/22/2011 - 15:34 | 986123 Fíréan
Fíréan's picture

If any representative from Goldman Sachs has the time would they please explain to me why i should trust them and believe anything they say in the public forum.

Tue, 02/22/2011 - 15:38 | 986131 Dr. Porkchop
Dr. Porkchop's picture

Because they do God's work? Therefore their market outlook is gospel.



Tue, 02/22/2011 - 18:18 | 986139 GoinFawr
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Original post 14:43
 My WTIC NYMEX chart just flatlined, anyone else's?

Update 15:01

Still got nothing. Stuck @ 93.75. Just a feed fucked? Everything else still spinning along as far as I can tell.

 Update 15:44


Update 17:17

Oh yeah, spot popped up to 95.35 plus AH, interesting.


Tue, 02/22/2011 - 19:00 | 986734 Coldfire
Coldfire's picture

It's just so awesome that Goldman can predict the future.

Tue, 02/22/2011 - 19:41 | 986853 PulauHantu29
PulauHantu29's picture

When WTI hits $150 he will say,"No one could have seen this coming."

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