Tuesday, May 06, 2008

Oil Superspike?

At least that seems that way according to Goldman Sachs.

Oil prices have nearly doubled from about $62 a barrel a year ago, which Goldman sees as a sign that the world is in the midst of a "super spike" in oil prices. Analyst Arjun Murti said in a research note released Monday that prices would ultimately force demand to fall sharply.

I would have to agree with Mr. Murti. I think demand will be crimped at prices that are higher then $120 and that would drop the price eventually. Once demand heads down then there will be an oversupply of the amount of oil needed. I still think oil will drop to an equilibrium level at about $100 or so once the high prices start to kill demand. I'm thinking that the supply estimate may be higher then normal tomorrow.

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