Oil has broken the $129 range, with an intraday high of 129.60 (markets are still open at the time of this post). T Boone Pickens was on CNBC this morning saying that the oil producing countries are 'running out of oil'. He projected that oil will reach $150 dollars a barrel this year due to demand outstripping supply.
A couple of quotes from Pickens' interview with CNBC:
- "The Saudis claim they have more oil," Pickens told CNBC. "They don't. The President wasted his time to go to Saudi Arabia, to say, 'Give us more oil.' They can't give any more oil...they're stacking up the money as fast as they can stack it up."
- 'Eighty-five million barrels of oil a day is all the world can produce, and the demand is 87 million," he said. "It's just that simple. It doesn't have anything to do with the value of the dollar."
- "We are now paying out...an estimated $600 billion a year for oil," he said. "It's four times the cost of the Iraqi war, and not one of the politicians running for president has anything to say about it. I don't know whether they don't know it, or they don't want to mention it."
Source: WSJ.com
Most recently Goldman Sachs increased it's estimate for oil to $141 dollars a barrel from $107, again citing supply constraints. Deutsche Bank, Credit Suisse and Societe Generale have also raised the oil price estimates for 2008 and 2009 based on increased demand and limited supply.
The trend for oil appears to be onward and upward. My guess is that there will be a correction in the oil market when it hits $130 dollars a barrel as traders take profits. It will continue to rise during the summer due to the risk of a hurricane. The wild card in this is at what point will demand be reduced due to price of oil?
Source:
'Oil Rises to a Record After Pickens Says Prices May Reach $150' by Mark Shenk, Bloomberg News
'Pickens: Oil Going to $150, So Move to Gas', by CNBC.com
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