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2007 Deja Vu As Goldman Sees $150 Oil By The Summer
While Brent closed 2012 at around its average closing price for the year, suggesting some stability, rolling a front-month contract garnered returns over 10% underscoring Jeff Currie's (Goldman's chief commodity strategist) note that money can still be made in a low volatility environment. However, he does note the incredible divergence between near-record-high geopolitical risks and near record-low Brent crude volatility relative to stocks. The key is that while Currie expects the global oil to remain cyclically tight (inventories low in 2013-14), with a $105.50 average for WTI; in an interview earlier today in Frankfurt, he said he wouldn't be surprised "if we woke up in summer and [Brent] oil cost $150" per barrel.
Dow Jones notes that:
Mr. Currie pointed out that despite the boom in U.S. shale gas, the oil price remains high, which he attributed primarily to sanction-related supply disruptions in Iran. Trying to compensate for this, Saudi Arabia has already increased its oil production to a 30-year high this year. At the same time, Mr. Currie added that while global oil demand has increased at a slower pace, it is still higher than the production increases in non-OPEC countries.
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Cushing must be overflowing... What's the crack spread on Brent & WTI?
$150 oil = crack-up boom. September 2013. 1923 Germany.
export land model a'comin
"If once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that consequently the prices of all commodities and services will not cease to rise, everybody becomes eager to buy as much as possible and to restrict his cash holding to a minimum size. For under these circumstances the regular costs incurred by holding cash are increased by the losses caused by the progressive fall in purchasing power. The advantages of holding cash must be paid for by sacrifices which are deemed unreasonably burdensome. This phenomenon was, in the great European inflations of the 'twenties, called flight into real goods (Flucht in die Sachwerte) or crack-up boom (Katastrophenhausse)."
Any fool can see that the Iranians are to blame here. Perhaps a return to a new Shah with privatisation of the nation's oil is in order.
Not sure how the "boom in US shale gas" has much to do with "the oil price remains high" but I never really learned to speak out of both sides of my mouth simultaneously...
Let's see, got my pencil handy ... $150/bbl, 16 bbls/oz of .9999, that makes $2400 per .... GOLD, BITCHEZ
GS says oil will rally? time to short it
And then the crash in 2014?
Best avitar ever.
Worst spelling of 'avatar' ever!
Avetteahr.
edit: Call me "Topper."
Items from the post:
1) Brent closing about its average for the year is not important. What it important was it closed at its all time closing year high, which it has done for about 3 straight years.
2) Saudi Arabia oil production is DOWN recently, not up. From 9.7 mbpd in Oct, they pumped 9.2 mbpd in Dec. per
http://www.opec.org/opec_web/static_files_project/media/downloads/public...
A friend of mine told me last night that he has been in North Dakota for two weeks (miserably cold) and that, "Our wells are not producing like they should be and the government wants to know why."
Xerxes showed the Hellespont not to eff with him, Bama needs to nut up
What the government needs to understand is that you can't print oil.
Tell him to tell them to ask Scotty...
Scotty's dead
Not to doubt this anecdote....
But it is very clear that D.C. was given the hard sell on the Bakken by Hamm et al... and they may have put too many eggs in that basket...
From my buddies over at TOD
And from Bloomberg a few days ago
I am so happy to hear more confirmation of this news. Bullish for tubular steel!
Because moving the tubular steel from the unproducing wells to ones which might produce would be completely out of the question, right?
Doesn't matter if you do.
Understand what the down escalator does. If you slow your sprint upwards, the down escalator takes you downward. To make up that ground you have to sprint harder, but that's only half the problem.
The other half is every single day that passes, more wells that are producing now are declining. The day you put a well into service is the highest flow rate that well will ever see. Every additional well you drill adds to the DECLINE.
In other words, the other half of the problem is the down escalator is speeding its downward motion. You have to sprint much MUCH faster.
And if you do, you just add to the wells declining their output and speed the downward escalator even more.
Heavy dude...
Every well drilled helps draw a steeper slope on the way down.
Why do you always insist on putting your ignorance on parade?
If there are hard limits to growth, everyone's religio-economic dogmas are shit.
Few believers can look God in the face and ask "Are you real?"
Actually the Buddhists don't seem to be hung up on the growth paradigm, but they have a different set of issues. It may well be that overcoming their issues will be a lot easier than overcoming ours....
It all remains to be seen. I think we'll know within a few decades at most if the future is going to look something like the past in reverse.
Infinite growth at this point looks pretty unlikely to me, and I see zero evidence that humanity will ever willingly choose a slow or no growth paradigm.
It's interesting that you mention Buddhists - while not being one, I have tremendous interest in and respect for them. I've also been thinking a lot about American Indians. Their world view is thousands of years long - in the end, they might get the last laugh.
edit: when I said "religio-economic" I really meant "economic." Economic dogma is just a secular version of religious dogma.
Thanks for the heads up. I tracked it down to the source, and there is one thing:
http://www.grandforksherald.com/event/article/id/253693/
It's almost as if the change of seasons always comes as a huge surprise...
What was that you said about seasonal adjustments a while back??
Well, in short, that unless information with regards to weights is accessible, it's to be considered no less than a propaganda tool.
Not sure I'd want "seasonally adjusted" Saudi output information.
Except I went back to previous years' Novembers.
Since the shale play started there have been no significant November declines. There was one in 2009, and it was tiny and likely demand related.
I wasn't having a dig at you, just making a remark about seasons always being a convenient scapegoat for ANY negative impact.
Just like when the refinaries have to "switch over" to produce heating oil and gas goes up. Its like ohh shit its gonna be winter in the northeast again?
Why don;t you learn something about refining, i.e. winter and summer fuel mixtures, and get back to us...
Sure thing, as soon as you learn where you can and can;t insert proper punctuation dipshit
Umm... maybe some of us type with more than our thumbs?
And if picking on my typos is the best that fucks like you have to offer then we are more screwed than I ever could have imagined... More evidence that this site has truly slid into the crapper...
More to the point, do you know *anything* about oil refining or do just assume that the tanks at gas station fill by themselves?
The decline rate in shale wells is much greater than traditional wells.
Porter Stansbury will be 'pissed'. He was all in the tank for this biz model some months ago, and ridiculed Peak-Anthing people. Were they front-running their clients? I wonder if they got that trick from that GS guy they picked up.
The news of rollover has been out only 3-4 days and the folks in the know are loud about it.
A lot of pressure will be brought to bear to drill-at-a-loss to make that decline go away. That sentence generally translates into "government subsidy".
That will work for a month or three.
Remember what porous rock looks like. A "reservoir" is not a lake of oil. It's rock. It's rock with pores that have oil in them. The interconnectedness of the pores determines how far from the well bore oil can flow. As the "bubbles" of porous rock get smaller and smaller, it costs more (in joules and dollars both) to keep drilling when all you're going to get is the smaller bubble.
But if it's government money driving the news report desired, you'll drill for smaller bubbles. At Bakken drill rates, though, that will only hide reality a few months.
Crack spread refers to something entirely different (eg, Heating oil vs WTI). The spread between WTI and Brent is approx $15.80 which is down from $25.53 back in November.
Never mind ...
Is that what Goldman sees or what they would like their clients to see?
However Goldman bets it's usually AGAINST their clients...might be a good idea to see which side of that trade they're ACTUALLY getting on for the scoop on this...
Since you can't make money with the present reality, even though things are bad, you use the prescribed fantasy of the stock holder of the entire market.
Usually the simplest action.
"A predator is intelligent by nature, and knows not to overhunt its feeding ground. A virus will just continue to spread, infect and consume, no matter what happens. It's the mindlessness behind it." - Max Brooks
We are not governed by predators. We are governed by a virus.
Whether or not interest rates ever rise again will tell us. My money is that they will, like they did in the 80's, and we are indeed governed by a predator.
$150 crude is an effect of the great reflation that has taken place. It is a sign that the american consumer has successfully deleveraged and is ready to start spending again. Throw in more fuel effecient cars and you start to really grasp the beauty of the dawning of a new day in this country
(fonzanoon cnbs tryout, take 7)
Yeah, great reflation of Ben's commodity bubble to further drain already dwindling purchasing power of the general populace in favor of bankster and speculating cronies ...but where DID all those retail investors go?
At top of housing boom, 2006, oil was ~ $68/bbl, coffee $106... but, but his loose money policies are doing the economy good -- a good economy being the supposed trade-off for screwing over savers (again in favor of these same cronies) -- as if food and energy inflation are not devastating to mid-class families.
general populace? retail investors? middle class families? I thought they got the TPS report. they got let go a while ago. they are like the guy in the basement with the stapler.
you're right...shiny cities on the hill in NYC and DC while rest of America is impoverished into Detroit squalor...three cheers for central planning (hopefully they don't have to step over us, getting their shoes dirty or anything)
The American consumer may have deleveraged more so through debt write-offs rather than loan repayments, but the reality of fewer jobs, lower paying jobs, understated inflation and zero interest income on deposits, means that the consumer really does not have a lot more cash to spend. Perhaps even less than ever.
Fuck you Goldman and your fucking Muppet bait fucking press releases. Fuck off.
Good. My disposable income was starting to pile up. This should help put a dent in that.
Economy can stand a bit more price shock from oil than in 2007. Less leverage overall out there.
I don't think so... partly because as part of that deleveraging access to credit has suffered for Joe Sixpack.. The HELOC ATM is closed...
There is not less leverage out there.
It just moved to the govt, and make no mistake about this, higher priced oil reduces GDP, which reduces tax revs, fires people, which boosts unemployment payments (and reduces tax revs) and reduces oil consumption (which reduces gas tax revs).
Always question your presumptions. There is not less leverage. Debt doesn't disappear unless it is paid off, and none has been.
Well....at least drive-by shootings will go down.
Especially with the ammo shortages...
http://www.drudge.com/news/164746/police-suffering-ammo-shortage
Soooooo GS sees oil collapsing....hmmmmmmm
Funny that,
I had a sense of deja vu this morning after waking up. Goldman had been (including all high level staff) burnt to a crisp in the terrible belly of Hades.
Fuck you Goldman, and the bollocks you and your staff pontificate about, and the fucking 3 legged lame donkey you rode in on. It will be a sweet day when I rean GS is no more, and I fucking cannot wait for it.
Fuckers
another zh loser-jealous of any anyone with $
retiringteach: Another brand new ZH troll-jealous of anyone smarter than him.
Your name speaks for itself, asshole.
Only way to kill this beast is to force China to float its currency. Then their growth will slow, as will the pressure on commodity prices. Instead we continue to stupidly pour money into the pockets of all petro tyrants.
Good. I can use more of my disposable 0.01% interest from my "High Yield Savings" account to buy $150 oil related products.
Too bad the world's machines cannot run on BS and hot air, WS would be the center of the energy universe.
Ah good, I was wondering when they were going to 'tell' us that the price was going to collapse
9/11 and Peak Oil
Swiss historian Dr. Daniele Ganser about 9/11, Mike Ruppert’s “Crossing the Rubicon” and Peak Oil. “Endless resource wars are no promising vision for the future.”
http://www.mmnews.de/index.php/english-news/3932-911-and-peak-oil
Funny how that works: competitive devaluation of fiat money and higher oil prices. Who could a knowed?
inflation adjusted compair to stocks oil should easly be about $150 so I think hes right
To the DUG-mobile?
Look at this market rip higher while metals stay on the sideline and interest rates stay low. Bravo Ben. unreal.
Markets at levels not seen since 2007!
What could go wrong!?!?
Um...2008?
there was no QE4eva in 07. it looks like we will crash up this time.
was there a debt ceiling raise needed in 2007
no idea. i don't see it being important. debt ceiling crap is manufactured crisis. not a real one.
Even if it is 100 % manufactured, the buffonery in December made clear that it affects the "market"
what happened in Dec? a few percent correction? what did i miss?
not that it would really put a dent in it, but they have to keep yields down some way
All that has to happen to get oil to $150. is someone say there is a recovery, which will kill any recovery. There will be no more growth, evah.
I'll wait a bot more. like 3 months to see if I should short oil or not
the oil markets are shaping up to the new reality - that Saudi Arabia will soon no longer be an ally of the USA
http://www.brookings.edu/research/papers/2013/01/revolution-in-riyadh
gs says: "if you are buying we are selling" Bonds going down" we buying.
gs is a cancer on the usa.
they need someone to buy their prop desk out of nymex positions.
they desreve ..................
no fargan chance we get to 150 this summer without a major war/flare up.......
I agree kito
~~~
The whole objective of this big charade is to keep the PAPER AVERAGES on a steady trajectory [so that some wonk, at the end of the year can point to a chart and say 'See Look' the AVERAGE price at the pump of gasoline only went 10 cents YOY... & some reporter fucks on the major networks give you the news on the evening report]...
That's all ANYTHING is about [when it comes to gold & silver prices KEEPING THEM DOWN, & gasoline prices KEEPING THEM ONLY MOVING UP AS INCREMENTALLY AS POSSIBLE]...
or sudden currency revaluation
magpie ~ I think about that all the time [currency revaluation]... If nobody is properly focused, they'll FAIL to see that THAT is what all this bumping & grinding is really about [trying to get that to occur in the most orderly way possible... IF POSSIBLE at all]...
The "Germany repatriation" of gold story had a lot to say about that [with regards to timline]... It's probably wise to lop off a few years of those "7"...
Nickles bitchez!... [Remember: what's being REVALUED are the FRN's ~ last I checked, a US Nickle wasn't a FRN, & it's not made of zinc]...
Thats a fargan lie and you know it!!
http://www.youtube.com/watch?v=3FPsMeQ6Ra4
Another push to get you to buy a tomato can to get to work in.
Goldman Sach's remarks above do not seem to jibe with this story on Goldman Sachs:
Am I overlooking something?
-- Paul D. Bain
PaulBain@PObox.com
http://www.businessinsider.com/goldman-long-term-gold-call-1200-2013-1
We are literally swimming in it up here in Alberta.
Stranded oil means we getting $42.50 a barrel (granted it is heavy crap).
$150 - fuck that......you can have mine for $100 - sold to YOU!
The Algerian situation - supposedly entirely out of left field - shows that Wishing, Hoping, and Propaganda are just not substitutes for actual geopolitical analysis.
Algeria is deemd Uber-safe because the US, UK, and France WANT it to be Uber-safe.
Meanwhile, Venezuela, which has shown NO signs of instability in light of the possible coming transition from Senor Chavez to Senor Maduro is apparently deemed the new North Korea or Somalia, because the Financial Times and wealthy exiles living abroad WANT it to be so, whether or not there is any truth in it.
I think most Market participants are truly sick of this state of affairs.
We are sick of being told what to think by a handful of Self-Anointed Ones at CNBC, the FT, or the WSJ, even when their Scripts are ridiculously biased and based totally on their geopolitical wish lists.
Goldman do what it does best. Selling shit to its clients.
While Cushing drowns in oil, Nigeria is not able to sell its oil, Saudi cut back productions, paper futures hold by commercials are growing.
Second Christmas day, paper oil went up 2.7 % out of nowhere. I presume Saudi bought a load paper oil to bust the real price. 10 dollar extra proffit will earn them 630 milj dollar a week.
Now this paper oil has to be sold. How do you sell it? By luring peopl in.
Morgan Stanly will follow with a 200 dollar estimate, it is worth nothing.
Last year, GS predicted >$120.....never happened.
There prediction is a "wish list".
So, I wonder which sucker is about to discover the hidden risk of hedging this time; caught in the short side of the futures market and getting the life squeezed out of them by Goldman and their virtually infinite access to trading cpaital?
Organized crime at its finest.
"(Johnny) Goldman Sees $150 Oil By The Summer!"Where does this jackass live? Monaco? Geneva? "Do you have any Gray Poupon?"
Everyone in America and the rest of the world is broke. Nobody has a pile of cash sitting around for the time when 'oil' costs $150 ... and if they have it, it's because they're smart and have gotten rid of that gas-sucking automobile!
Inability to pay/inability to borrow is what links every aspect of our unraveling economic joke together. Maybe one of these days the Johnny Goldman's out there will 'get wise' (and their heads out of their asses)!
Good grief!
When Goldman Sachs speaks...you guys actually "listen"?
WTF?
I'd listen if they tell me how many leased supertankers they'll have filled up by July.
Ha ha suckers- must be GS client comment day at zerohedge.
Dumbasses, Iran as 0.1% sway over oil prices. But WHY, Lord Sykes?
1. They don't sell oil in USD. (hint there are a bunch of euro/china country(s) that are not buying oil in USD)
2. They don't sell oil to USA.
3. If Oil was a buck fifty the sanctions wouldn't be working. (better to starve them out at $80 and lower, even $75-78 hurts them) Israel is not that dumb.
4. Why would you want to give an economic advantage to Iran, a country with a shit load of fighting aged men to buy more shit for them?
5. High oil prices means you kill your own economy- Sheeple do not back war if the economy is in the shitter.
I see $78-$91 this yr.
The WTI Brent spread will slowly disappear as the bottle neck in Cushing is bypassed...So unless there is another massive collapse a la Lehman your prediction is wishful thinking....
I would put $20 bucks on that, friendly bet. by aug31- end of summer oil in my price range above.
I have a lot more at stake everyday...
But, let's do plan on reviewing that call when the time comes. And to be sure, you do mean WTI, correct?
I hope you do have more at risk than 20 bucks.
the 20 is only to keep it competitive, if the wife will not let you, thats ok too.
WTI price Aug 31 at close.
Braggin rights here is worth more than $20....
So... It's time to short oil?
It's a long way to go.
http://bullandbearmash.com/chart/wti-oil-weekly-runs-channel-resistance/
US dollar would have to fall hard and the Euro, Pound and Yen would have to rocket. Not probable.
My technical Take from last week..
http://www.youtube.com/watch?v=NpnVxg0PCys
So, does this mean that Gold & Silver will finally be allowed to go up in price, along with Oil?
Or are they are betting that by the time it does, no one will notice, as they will be too busy cursing about the sky-high gas prices and will have no DI (Disposable Income) for The Precious?
In any case, I guess that Big Oils/Oli's and Big Bro will make money to boost the iGDP? ;-)
God grant me the serenity to accept the things I cannot change; courage to change the Flying 7100 I can; and wisdom to know the difference.