OMG New 'super-spike' might mean $200 a barrel oil

If you look at what Goldman Sachs has says $200 a barrel could be a reality in the not-too-distant future in the case of a "major disruption."

1. We see the the dollar's fall continuing and financial markets roiled by the credit crunch, commodities like oil have been drawing the fancy of increasing numbers of investors.

2. More Wall Street firms have been eager to adjust forecasts to incorporate fresh data on the global economy and energy supplies.

3. Goldman Sachs characterized the upper end of the band as more likely to be driven by geopolitical turmoil and that recession was a key risk to their view," the analysts said. "In fact, oil prices have reached $100 a barrel without extraordinary turmoil, and the U.S. currently appears to be in recession."

4. "The Meat & Potateos of the story and the 'super-spike' view is that oil prices will keep rising capacity anduntil demand declines globally on a multiyear basis, resulting in the return of excess a lower cost structure," Goldman's analysts said. "Given this view, once excess capacity returns, we think prices can move sharply lower."

EXCESS CAPACITY RETURNS, PRICES WILL MOVE SHARPLY LOWER

Hey Slow Down and Find ways to

cut back on the use of Fuel TODAY

& WE all will SAVE $$$

By Steve Gelsi, MarketWatch
Last update: 1:42 p.m. EST March 7, 2008

http://www.marketwatch.com/news/story/goldman-sachs-raises-possibility-200/story.aspx?guid=%7B4B702F7F-41F8-45F0-A133-630F12F2C764%7D