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Oil to exceed $100 per barrel in 2011

December 15th, 2010 · 2 Comments

According to Goldman Sachs..

From Bloomberg:

Oil to Exceed $100 in 2011 as OPEC Spare Capacity Shrinks, Goldman Says

By Yee Kai Pin – Dec 14, 2010 4:15 AM GMT+0100

A drop in OPEC spare production capacity will signal a “second stage” in the oil market’s recovery, lifting crude higher than $100 a barrel by the second half of 2011, according to Goldman Sachs Group Inc.

The Organization of Petroleum Exporting Countries will supply more oil, reducing its spare capacity, as global inventory levels “normalize” from an overhang cause by the recession, the bank said in its 2011 commodities outlook dated yesterday. The 12-member group, which pumps about 40 percent of the world’s crude, said at a Dec. 11 meeting it will maintain production targets at levels agreed in December 2008.

“Inventories have declined rapidly in recent months as global demand growth has accelerated to one of the highest levels on record,” Goldman analysts led by London-based Jeffrey Currie said in the report. “We expect global demand growth to remain strong at over 2 million barrels a day.”

Oil has risen 11 percent this year on speculation the global economic rebound will boost fuel consumption. The International Energy Agency, in its monthly report Dec. 10, upgraded its demand forecast for next year, citing gains in North America and China. Futures for January delivery on the New York Mercantile Exchange traded at $90.76 a barrel on Dec. 7, the highest since October 2008, and were above $88 today.

OPEC members with formal output quotas, which excludes Iraq, produced 26.7 million barrels a day last month, 1.9 million more than targeted, according to data compiled by Bloomberg. Nigeria, Iran and Angola exceeded their quotas the most in volume terms.

“As OPEC spare capacity is drawn down through the second half of 2011, we expect the market to begin to transition back to a structural bull market, with WTI crude oil prices rising back above $100 a barrel,” the analysts wrote.

Price Forecasts

Goldman Sachs, in yesterday’s report, predicted West Texas Intermediate crude, the benchmark grade traded in New York, will rise to $89 a barrel within three months, $100 within six months and $105 within a year. Oil last traded above $100 in October 2008 as commodities and equities fell following the collapse of Lehman Brothers Holdings Inc.

The first stage in the oil market’s recovery started with the decline in inventories, the bank said.Crude stockpiles in the U.S., the largest oil-consuming nation, declined earlier this month to 355.9 million barrels, according to the Energy Department. That’s 9.8 percent above the five-year average, down from more than 13 percent two months ago.

Supplies probably dropped 2.6 million barrels in the week ended Dec. 10, based on the median estimate from 11 analysts surveyed by Bloomberg News before the department’s weekly report tomorrow.

Tags: Oil

2 responses so far ↓

  • 1 N // Dec 15, 2010 at 9:59 pm

    BRING IT ON!

    All the Environmentalist will be singing a different tune as oil reaches triple digits and more.. Sure they dont want to drill onshore/offshore on US land but it is OK to drill on other countries land…How Hypocritical!

    I know I know…the answer is to go green and switch to battery/solar powered vehicles…..WRONG!!!!! how do you think batteries are made? Try Rare Earth metals……and how do you get rare earth metals…….You mine for them…but wait we cant start tearing up our land here in the US…. WELL GUESS who will start making all the $$ and relying on us to depend on them…………CHINA!!!!!!!! I REPEAT CHINA!!!!!! China has 90% of the worlds REE (Rare Earth Elements) The last thing we need is to be dependent on China for going Green……

    The answer to our problem is Natural GAS…. WE have plenty of it here in the US and would not require us to rely on other countries that hate our guts and want to take over the world. People think just by going green because you plug it into the wall that your “green” but they have no idea what it takes to generate power. burning coal, wind which your harldy get any power….etc

    Go green, means mining for it or giving your money to China. The answer is so simple, Natural gas, cheap and tons of it right here in the US…

    Until then thats fine, dont allow us to drill offshore, dont allow us to mine and as other countries control the price of oil and as it shoots through the roof. I will just watch my monthly oil production checks go up! You decide

  • 2 NW // Dec 16, 2010 at 5:03 pm

    InterOil Acquires Participation Interests in the Elk and Antelope FieldsFont size: A | A | A8:00 AM ET 12/16/10 | PR Newswire
    InterOil Corporation (NYSE: IOC) (POMSoX:IOC) announced an acquisition of indirect participation interests held by investors under the Amended and Restated Indirect Participation Interest Agreement dated February 2005 (the “IPI Agreement”). The interests acquired total 1.05% participation in the Elk and Antelope fields in Papua New Guinea and in any future discoveries made as a result of four exploration wells still to be drilled under the IPI Agreement. In exchange for these interests, InterOil issued 546,507 common shares. InterOil’s current interest in its exploration licenses is 75.6114 %, assuming that all remaining indirect participation interest investors take up their working interest rights in such licenses and excluding the interests that the Independent State of Papua New Guinea is able to assume under relevant legislation.

    the above press release (and please correct me if I’m Wrong) speaks loud… InterOil is willing to BUYOUT additional working Interst in the 2 fields…. Why…because they believe or have found significant sesmics or data not released to the public that pretty much tells management……….WE WANT ALL THE W.I we can get!!!!!! as a private oil and gas investors this speaks loud to me……..

    others readers thoughts?