Gas Week

EWN Publishing

Oil price: Goldman Sachs JBWere predicts multi-year, three-phase, forecast “super-spike” band from $US 105 a barrel to $US 135 a barrel

Posted by gasweek on 3 October, 2007

Goldman Sachs JBWere said that recent rises in the oil price were the second phase of a multi-year, three-phase “super-spike” era, underpinned by the struggle of oil suppliers to catch up with growth in demand, reported The Australian Financial Review, (24/9/2007, p. 25).

Forecast “super-spike” band: The brokerage predicted the price rise heralded the next big leg up for the oil market, and raised the upper limit of its forecast “super-spike” band from $US 105 a barrel to $US 135 a barrel. Goldman Sachs JBWere said that oil and refined product prices needed to move to a high enough level for a long enough period to trigger a multi-year reduction in demand. Only when that happened would lower oil prices return, it said. GSJBW equity strategist Chris Pidcock increased the energy exposure of the broker’s model portfolio by increasing its position in Woodside Petroleum.

ABN Amro says “No”: However, ABN Amro Morgans economic strategist Michael Knox said he believed that the price of oil was more likely to fall for the remainder of the year, as it was trading above what he calculated to be the equilibrium price of $US74 a barrel. On average, the oil price had experienced a seasonal peak at the end of September over the past 10 years as the price was bid up throughout the northern hemisphere’s summer driving period, Mr Knox said. In fact, for the past five consecutive years, the US dollar oil price had fallen between the end of September and the end of December, he said.

The Australian Financial Review, 24/9/2007, p. 25

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