Posted on 04/02/2005 9:09:59 AM PST by sully777
NEW YORK (Reuters) - Oil prices surged to a record near $58 a barrel on Friday, powered by a forecast the market could spike above $100 due to robust global demand and tight spare capacity.
Prices have climbed around 30 percent this year, with big-money speculative funds buying heavily on signs that rapid demand growth in Asia's emerging economies and the United States would strain world supply.
U.S. light crude settled up $1.87 to $57.27 after peaking at $57.70 a barrel, breaking the previous record of $57.60 hit March 17. London's Brent crude climbed $2.22 to $56.51 a barrel.
U.S. gasoline futures for May hit a record $1.7360 a gallon on worries that a national stockpile surplus could dwindle ahead of driving season, while heating oil futures struck a peak of $1.6750 a gallon.
Top energy derivatives trader Goldman Sachs (GS.N: Quote ,Profile ,Research ) said in a report on Thursday the oil markets might have entered a "super-spike" period, which could eventually drive prices toward $105.
"That was a pretty big call by them and the market is just assessing where supply and demand really sits," said David de Garis, senior economist at ANZ Investment Bank in Melbourne.
"In a very interesting report, Goldman talked about how we might see a longer cycle and a higher cycle than we have seen in a very long time," said Deborah White, senior economist at SG Commodities.
Goldman Sachs raised its 2005 and 2006 price forecasts for U.S. light crude to $50 and $55, respectively, from $41 and $40, citing resilient oil demand growth.
Prices rallied 2.6 percent on Thursday on the back of the report and also on concerns about the adequacy of U.S. gasoline stocks ahead of the peak summer demand season.
GASOLINE SUPPLY ANXIETY
Production problems over the past week have deepened concerns over whether refiners will be able to meet gasoline demand this summer.
A 485,000-barrel-per-day (bpd) refinery in Venezuela -- the world's fifth-biggest oil exporter and a top supplier of crude and oil products to the United States -- was shut down on Thursday by a power failure.
State oil company PDVSA said it aimed to resume full operations at the Amuay refinery in seven days at the latest and that supply to local and international markets was guaranteed.
A fatal explosion last week at BP Plc's (BP.L: Quote ,Profile ,Research ) Texas City refinery, the third-largest in the U.S., also unnerved the market, along with problems at several gasoline-producing units.
For the past month, U.S. gasoline demand has been 2 percent higher than the same time a year ago, despite record pump prices.
The U.S. Energy Information Administration (EIA) reported on Wednesday gasoline stocks fell 2.9 million barrels to 214.4 million barrels last week, the fourth decline in a row.
'That was a pretty big call by them and the market is just assessing where supply and demand really sits,' said David de Garis, senior economist at ANZ Investment Bank in Melbourne."
Recap: Top oil trader Goldman Sachs speculates $105 (largest stake will benefit company in claiming speculation). Market is unsure (no hard facts to back up GS claim) nevertheless raises futures prices based on GS' report. Spot markets react to futures market. Gasoline prices rise based on artificial report on a futures market. Common person sees prices rise without knowing the facts behind the hikes.
What a scam.
what it all translates into is that this summer is going to suck for those that have to drive.....
I wonder what the economy will look like in September.....
It's absolutely disgusting, this profiteering. They clearly invested in oil futures before they made their hysterical prediction, with the aim of cashing in on the rise that would result from the prediction itself.
There very well may be good money to be made by betting on this price spike to evaporate - wait 'till hit hits an apparent high then short it like mad.
I disagree that it's a 'scam'. GS is basically looking at how high oil and gas prices went as a consequence of oil market disruptions in the early 80's. As a percentage of GDP we have a way to go to reach that previous price spike. The early 80's gas prices encouraged consumers into more more conservation conscious decisions, which is what helped bring prices back down. Whether gas prices spike to the same percentage of GDP as they did in the early 80's is obviously speculation, but that's the foundation for the market price ceiling they're predicting.
Glad to see you and Poohbah remained. Whenever I get hot under the collar, I lurk and post on BigB type threads. Or I just take long hot shower. For days. Wrinkled beyond recognition.
Soros and co.. play the swarms of low and mid-level investment managers, and the individual investors like pawns.
I've made decent money a couple times watching them hype something, then selling it myself when it goes out of reasonable value...
Meanwhile these guys keep just hyping it and pumping it.. As it goes up a lot they start pulling out. Then its time to start shorting it, and bring out some negative analysis from their financial houses and financial publications.
The poor stupid bastard low level traders and investors end up eating it both ways. And then get suckered again a few months later.
Oil is definitely in a long-term upward movement, but Goldman's "announcement' is nothing but manipulation. They are long in the market and using this 'report' to move the price their way. It is so blatant that it will encourage an investigation.
While the supply-demand situation has tightened as a result of increased demand (especially from China and India), currently oil stocks in the US and Europe are full. No reason for this current spike except manipulation. Look for a correction. Somebody is making money on the run-up and will make money on the way back down.
There's no basis for GS's argument, esp. in the near future. Iraq (2nd largest known reserve in world)and Libya are opened for business. Inventory is relatively high for the amount of economic growth in world. ANWR should pull down prices as companies begin to drill the enormous reserve. OPEC is pushing higher capacity. And spring is here in the Northeast.
One guy on Neil Cavuto's panel about a week and half back suggested an even higher price based on inflation. But what he did not say was that his spec was based on Iranian hostage situation, Carter admin boondoggle, Israel-Lebanon conflict, high inflation, Alaska oil just coming online, and limited oil reserve potential (back in the oil will run out in the year 2000 mentality). He was playing games with numbers and histocial references. I'm watching the shell game and it's a scam.
Yeah, I'm starting to think that the real way to make money from the stock market is to take advantage of these kinds of opportunities, where some big investor/financial co. makes a ridiculous claim that's obviously intended to move prices. It lets me know where they've placed their bets, and if one places the same bet, it's likely to turn out pretty good.
My bad. I read your thread but then people linked to other opi and I guess I melded all opi together and lumped them into your thread.
Oil hit $2.50/gallon at the cheapest gas station in town. I drive 100 miles a day and from now on everytime I fill up, I will think about Goldman's market manipulation. Not that it's all their fault I just want to put a face to this non-sense.
Holtz
JeffersonRepublic.com
You're exactly right, that is the key, watch for the ridiculus claim, that seems out of place. They play on people's greed, which is a very strong emotion..
So people will go in now thinking hey oil is only 57$.. but its going to spike up to as high as 105$!!! So I'll sell out maybe at 100$, making big money.
The other trick these guys use, is they try to make their ridiculus claim sound believable. With charts, some interviews with people in the industry etc.. And only showing one side of the story.
Fuggetabout Goldman Sucks! Watch it to come down and relax.
"Oil is definitely in a long-term upward movement, but Goldman's "announcement' is nothing but manipulation."
That their brilliance.. its obvious oil is going upwards, as supply is having trouble keeping up with demand. So right away by coming out and saying oil is going to go up it adds credibility.
Then they throw in the 105$ figure, to wet people's lips.
$100 Oil My Foot
http://www.freerepublic.com/focus/f-news/1376042/posts
That was from an article in MarketWatch dated 03/23/05.
A week later and the announcement by Goldman which caused the spike in oil futures and a rally in energy stocks after the previous dip.
Coincidence or collaborative manipulation?How could it be proved?Does the SEC even look?
If you owned energy stocks yesterday than you did fine.If you have money,401K,IRAs in index or balanced funds you took it on the chin yesterday due in part to the futures spike.
Pump and dump.
Mark Rich, oil speculator and Clinton pardonee, is getting even richer.
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