Oil May Reach $150 This Summer, Goldman's Currie Says (Update1)
By Nesa Subrahmaniyan and Christian Schmollinger
June 9 (Bloomberg) -- Crude oil prices may reach $150 a barrel this summer because of lower U.S. stockpiles and falling supply, said Jeffrey Currie, head of global commodities research at Goldman Sachs Group Inc.
Goldman also forecasts that oil will end the year at about $150, he said at the Asia Oil and Gas Conference in Kuala Lumpur today. The likelihood of that has increased as U.S. crude oil inventories declined, an ``extraordinary event'' before demand peaks during the summer driving demand.
Russian oil production fell to an 18-month low in April while Mexican output also declined, highlighting the inability of nations outside the Organization of Petroleum Exporting Countries to increase supply. U.S. crude stockpiles have dropped 5.8 percent in the three weeks through May 30, according to the U.S. Department of Energy. That compares with an increase of 2.5 percent in the same period a year earlier.
``We don't have adequate inventories, and demand exceeds supply even though we have a weaker demand environment,'' said Currie. ``This increases the upside potential for us to trade well above $150 a barrel.''
Crude oil has doubled in the past year, reaching a record $139.12 a barrel in New York on June 6.
Morgan Stanley, the second-biggest U.S. securities firm, said June 6 that current shipping patterns suggested the U.S. benchmark West Texas Intermediate crude oil may reach $150 a barrel by July 4.
Middle East oil shipments are similar to the end of the third quarter last year, when Morgan Stanley had predicted an ``oil price spike'' based on projections of inventory draws in the Atlantic Basin, Ole Slorer, the bank's analyst, wrote in a research note on commodity shipping.
Russia's oil production in April dropped to 9.72 million barrels a day, 0.8 percent below year-earlier levels and only slightly higher than October 2006, according to data released by CDU TEK, the dispatch center for the Energy Ministry. Compared with March, output fell 0.4 percent.
Petroleos Mexicanos, the state-owned oil company, said on May 23 that April crude production fell the most in more than 12 years as output at its largest field declined faster than the company forecast. Crude oil production fell 13 percent to 2.767 million barrels a day in April. The decline was the largest since October 1995, when output fell 29 percent.
``Prices will plateau, not collapse,'' Currie said. ``Demand keeps going up but supply can't keep up.''
To contact the reporters on this story: Nesa Subrahmaniyan in Singapore at email@example.com; Christian Schmollinger in Singapore at firstname.lastname@example.org Last Updated: June 9, 2008 03:29 EDT