At least one banking and securities firm is anticipating that benchmark West Texas crude oil will be trading at
$105 per barrel. If you haven't ordered your Prius yet, this may be the time:
Oil prices have entered the early stages of trading that could lead to a "super spike" with the potential to move prices to $105 per barrel,
enough to meaningfully reduce energy consumption, according to a Goldman Sachs analysis.
The call, which would mean a possible doubling of oil prices from their current level, sent crude back above $55 per barrel for the first time in a week.
Hmm, something fishy about this. Oil was falling earlier this week and one analyst makes a startling prediction and oil climbs again.
Phil Flynn, senior market analyst at Alaron.com, said $105 oil is technically possible but not likely for at least 3 years and only if a major supply disruption, such as a halt to imports from Saudi Arabia, occurred.
So Phil's giving it three years to reach $105 per barrel. That's still not a very long time. Such a rapid increase in per barrel costs will send shock waves throughout the world economy.
John Kilduff, energy risk analyst Fimat USA, agreed that the $105 price assumes a major supply disruption in Saudi Arabia or a Venezuelan embargo on shipments to the U.S.
"I don't know how they get to that number, short of a significant supply disruption event occurring," he said.
"It's more reflective, to be fair, of the psychology of the energy market right now that there's going to be tremendous demand growth in the late third and the fourth quarter of this year. That's going to put the producers of crude oil in an extremely challenging position in terms of meeting that demand, and that's what is being priced in right now."
Speculation is driving the market up, and this projection by Goldman Sachs is like throwing gasoline on the fire. At least the Goldman Sachs analyst included in his statement a warning about conservation, even though it may be involuntary.