UBS Analysts - Average Annual Oil Prices By 2012 - $156/Bbl - Rigzone

[hatrack]

Crude oil prices are set to steadily rise over the next four years and will take the earnings of major oil companies along for the ride, UBS told investors Thursday. The firm now sees crude oil prices averaging $115 a barrel this year and reaching an average of $156 a barrel in 2012. This will benefit major oil companies including Chevron Corp. (CVX), which it upgraded to buy, as well as oil service and drilling companies, several at which UBS started coverage Thursday also with buy ratings.

The move marks a major switch in UBS' view of crude oil prices, which it had expected to pull back in the face of reduced demand due to concerns about a recession in the U.S. Goldman Sachs also raised its expectations for the oil market last week - both firms revised their views upward as benchmark crude futures in New York rose by around a third in just the past three months.

Goldman last week put forward two scenarios for the oil market - either a "super spike" to as high as $200 a barrel over the next two years before dropping precipitously to a "normalized" price of $75 a barrel in 2011, or a more gradual ramp-up in average prices to $120 a barrel by 2010, and lasting for a few years before falling again.

UBS' view seems to cut the difference between Goldman's scenarios - the firm sees crude marching steadily higher to an average of $156 a barrel by 2012, with its normalized price reaching $96 a barrel in 2013, or $82 a barrel in today's dollars. The normalized price represents an estimated minimum producers need to charge in order to generate enough returns to stay in business.

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http://www.rigzone.com/news/article.asp?a_id=61952

[GliderGuider]

1. I'm prepared to call both Goldman and UBS a bunch of pikers.

I'm expecting $300-$500/bbl by Jan 1 2012. I don't think we'll see demand destruction reduce the price more than momentarily until a year or two later. But hey, I'm just some schlub who blogs in his underwear.

[Speck Tater]

2. I predict $156 oil by August 2008. Those guys are delusional. NT

[hatrack]

3. Ah, but they're talking annual averages, not specific price points

Not that I think you're off the mark here!

:toast:

[pscot]

4. I think there's an unstated assumption

underlying these lowball projections. At some point prices begin to drive down demand. IMHO it would take a global recession (depression?) to drive prices below $100. Even if the U.S. economy shrinks, it's not clear that that would slow China's growth, which seems to have taken on a life of its own.

[bhikkhu]

5. Assuming 4 yrs out that the $ remains a big factor in oil pricing

Reminder that isolated fiat currencies are not the most stable examples of trends in international commodities. Local conditions may diverge from international conditions, and the price of oil in dollars could be much less predictable than oil in Euros or Swiss francs, or gold.

For one local problem: Mexico's production is tanking, their exploration has been discouraging, and that is 15% of our supply. (http://www.rigzone.com/news/article.asp?a_id=61624). Impacts to the US economy separate from Asian economies, for instance, may lead to problems.

Not asking for trouble, as I live here and am raising two daughters, but looking a few years out I see a lack of justification for the calm optimism of economists who assume everything will always be as it is, except for a manageable variable or two.

[Bigmack]

8. If oil is price, internationally, in another currency (which now looks,

VERY possible) because the dollar comes to be seen as too risky and weak, wouldn't that make oil even MORE costly in dollars? Assuming, that is, that the dollar continues to tank relative to the euro, etc.. It seems to me that the yahbos predicting ultimately moderating oil prices (in dollars) are TOTALLY ignoring broader international economic realities, not to mention current trends in the currency markets. I sure wish I understood better the in's and out's of economic behaviors. And it's NO comfort that the so-called "experts" don't seem to have much of an "actual" grasp of these behaviors either. Ms Bigmack

[kristopher]

9. Yes, you are correct.

But there are a lot of ifs.

After his speech in the Knessett Bush was rebuked by both the Saudi's and Egypt for basically not affirming "the right of the Palestinians to exist", is I think how they put it. They accused him of appeasing the Israelis. I suspect that was in the same conversation where the Saudi's reject any substantial increase in production.

Iran has dropped the dollar in favor of the Euro and Yen. They've been threatening to try and move all of OPEC away from the dollar for quite some time.

[tom_paine]

6. LOL. These guys are smoking crack, and peddling it, too.

It makes me laugh. Do they believe their own lies, I wonder? Or is it just a dumbshow to keep the herd of sheep from panicking, which may lead to having to slaughter us before our Bushie-Totalitarian Masters are ready.

[Zachstar]

7. If only