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    Home > Biochemistry News > Amino Acids Research > Goldman Sachs chief energy analyst: Oil prices will be between $150 and $200.

    Goldman Sachs chief energy analyst: Oil prices will be between $150 and $200.

    • Last Update: 2020-07-30
    • Source: Internet
    • Author: User
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    Arjun N. Murti, chief energy analyst at Goldman Sachs, predicted in 2004 that "the price of crude oil and natural gas will soar over the next 10 years." "It was a controversial report, when crude oil prices were just $40 a barrel. Four years later, the figure was $139.

    .

    Murti believes prices in the energy sector will rise to an inflection point in demand. "The possibility of crude oil prices rising to the $150-$200/barrel range over the next 24 months is increasing," he said in a recent report.



    in the interview, the 39-year-old analyst appeared to be very low-key, even refusing to take a picture. But Murti's stark views resonate in capital markets. U.S. stocks fell on Friday as crude oil prices approached $139 a barrel. Murti said oil prices would continue to rise in the future because of limited supply and strong demand.

    .

    oil supply is hard to increase

    .

    ask: How do you see the price of crude oil rise again on Friday?

    .

    : There are a number of factors supporting the rally: the U.S. oil catalog released on June 4 shows a drop in supply, Russian oil producers announced production cuts in May and Mexico's oil production fell this year.

    .

    ask: In the long run, what pushed oil prices to such a high level?

    .

    : First of all, the capacity to supply oil is limited, whether it is opec crude oil, natural gas or related refining products. In all these areas, the potential for substantial growth is limited. Moreover, it is becoming more difficult for companies or countries to increase supply, as has been evident in the early years of the 21st century.

    .

    our view is changing, from the "supply increase is easy" in the 1990s to "increasing supply is becoming increasingly difficult". This may be because traditional oil-producing regions such as Mexico and North Sea are declining capacity. Of course, there are new supply areas, such as Brazil and Angola. But if we add all the supply, we'll find that supply from non-OPEC regions is clearly a cup of water.

    .

    on the other hand, although demand is increasing. But we don't fit the "peak" to describe oil supplies. People don't believe that the world is running out of oil.

    . (NextPage)

    .

    if the price of oil rises to $200

    .

    ask: What would happen if the price of crude oil rose to $200 a barrel?

    .

    : We are nearing the end of the game. After eight years of rising oil prices, supply has barely increased this year, and certainly not. Demand from outside the United States, Europe and Japan is more resilient than expected.

    .

    While we can't predict how high oil prices will go, high oil prices will mean a halt in demand. Subject to political and geological constraints, it is unlikely that supply will be increased, so when oil prices hit this high, demand will only be reduced. But if you look back at the 1970s, rising oil prices eventually led to a drop in demand.

    .

    ask: What level do you think oil prices will lead to lower demand?

    .

    : At the moment, we're starting to expect demand from the U.S. to fall, but in non-OECD countries, such as China, the Middle East and other Asian countries, demand for oil is likely to increase. OECD countries include the United States, European countries and Japan.

    .

    fact, China and the Middle East are the main oil suppliers. Overall, demand in the Middle East and China is similar, and at similar growth rates. Demand from Latin America is also increasing.

    .

    So the key question is, when will demand decline in non-OECD countries? When will people's spending habits change in the United States? If the price of oil once soared to $4 a gallon and fell to $3 a gallon, people would cut the number of kilometers they were driving. But if people believe that high oil prices will continue, they may turn to public transport. Or a hybrid car, and other vehicles that consume less oil.

    .

    : There is a lot of discussion about speculative funds in commodity markets. Is oil prices merely a short-lived bubble, and what do you think of the problem? Where will the price of natural gas go?

    .

    : Our theory is that LNG prices in the U.S. will continue to rise because gas prices in the rest of the world are higher. In Japan and South Korea, for example, the price has reached $18-20/million BTU. The Price in the U.S. is just under $12/million BTU, almost the lowest in the world.

    . (NextPage)

    .

    oil companies are cheap

    .

    ask: Why do you and your team look after the synthetic oil companies?

    .

    : At present, the market view of synthetic oil is very pessimistic. Fearing that there would be a windfall tax on this area.

    .

    market people generally think that if you're bullish on the oil market, it's best to have companies or oil service companies that can mine and produce petroleum products at the same time. At the same time, the price of oil, which is generally accepted in this market, is lower than we think. All these factors make the share prices of major oil companies look too cheap.

    .

    just last week, at $110 a barrel, the price-to-earnings ratios of major oil companies, including Mobil, Conocophillips and Chevron, were all trading at about eight times earnings, while corporate value (market value plus net debt) was four times Ebitda 's earnings before interest, tax, depreciation of fixed assets and installments. This is historically very cheap.

    .

    ask: Another area you're looking at is mining and production?

    .

    : That's true. These companies are strongly linked to natural gas, and we are very bullish on natural gas. Natural gas has been cheap in the past few years, and that is changing in the United States. So companies that extract and produce natural gas will start to benefit. Moreover, many of these production companies are drilling in shale, such as Shale Barnett in Texas, Fayetteville Shale in Arkansas and Horn River Basin in British Columbia.

    .

    All of these companies are now cheap because the market hasn't taken into account the price of oil and gas, with Apache's ev/ebitda at four times and Cabot a little bit more expensive and 6.5 times, according to our data.

    .

    ask: What are your top concerns about the future of energy stocks?

    .

    : The biggest danger is the sharp expansion of demand in emerging markets, which is hard to predict why, and once that happens, the changes will be very sudden, and we are very worried about that. We think the $200 range is the culmination of oil prices, which will be between $150 and $200.



    . Arjun N. Murti, chief energy analyst at Goldman Sachs, predicted in 2004 that "the price of crude oil and natural gas will soar over the next 10 years." "It was a controversial report, when crude oil prices were just $40 a barrel. Four years later, the figure was $139.

    .

    Murti believes prices in the energy sector will rise to an inflection point in demand. "The possibility of crude oil prices rising to the $150-$200/barrel range over the next 24 months is increasing," he said in a recent report.



    in the interview, the 39-year-old analyst appeared to be very low-key, even refusing to take a picture. But Murti's stark views resonate in capital markets. U.S. stocks fell on Friday as crude oil prices approached $139 a barrel. Murti said oil prices would continue to rise in the future because of limited supply and strong demand.

    .

    oil supply is hard to increase

    .

    ask: How do you see the price of crude oil rise again on Friday?

    .

    : There are a number of factors supporting the rally: the U.S. oil catalog released on June 4 shows a drop in supply, Russian oil producers announced production cuts in May and Mexico's oil production fell this year.

    .

    ask: In the long run, what pushed oil prices to such a high level?

    .

    : First of all, the capacity to supply oil is limited, whether it is opec crude oil, natural gas or related refining products. In all these areas, the potential for substantial growth is limited. Moreover, it is becoming more difficult for companies or countries to increase supply, as has been evident in the early years of the 21st century.

    .

    our view is changing, from the "supply increase is easy" in the 1990s to "increasing supply is becoming increasingly difficult". This may be because traditional oil-producing regions such as Mexico and North Sea are declining capacity. Of course, there are new supply areas, such as Brazil and Angola. But if we add all the supply, we'll find that supply from non-OPEC regions is clearly a cup of water.

    .

    on the other hand, although demand is increasing. But we don't fit the "peak" to describe oil supplies. People don't believe that the world is running out of oil.

    . (NextPage)

    .

    if the price of oil rises to $200

    .

    ask: What would happen if the price of crude oil rose to $200 a barrel?

    .

    : We are nearing the end of the game. After eight years of rising oil prices, supply has barely increased this year, and certainly not. Demand from outside the United States, Europe and Japan is more resilient than expected.

    .

    While we can't predict how high oil prices will go, high oil prices will mean a halt in demand. Subject to political and geological constraints, it is unlikely that supply will be increased, so when oil prices hit this high, demand will only be reduced. But if you look back at the 1970s, rising oil prices eventually led to a drop in demand.

    .

    ask: What level do you think oil prices will lead to lower demand?

    .

    : At the moment, we're starting to expect demand from the U.S. to fall, but in non-OECD countries, such as China, the Middle East and other Asian countries, demand for oil is likely to increase. OECD countries include the United States, European countries and Japan.

    .

    fact, China and the Middle East are the main oil suppliers. Overall, demand in the Middle East and China is similar, and at similar growth rates. Demand from Latin America is also increasing.

    .

    So the key question is, when will demand decline in non-OECD countries? When will people's spending habits change in the United States? If the price of oil once soared to $4 a gallon and fell to $3 a gallon, people would cut the number of kilometers they were driving. But if people believe that high oil prices will continue, they may turn to public transport. Or a hybrid car, and other vehicles that consume less oil.

    .

    : There is a lot of discussion about speculative funds in commodity markets. Is oil prices merely a short-lived bubble, and what do you think of the problem? Where will the price of natural gas go?

    .

    : Our theory is that LNG prices in the U.S. will continue to rise because gas prices in the rest of the world are higher. In Japan and South Korea, for example, the price has reached $18-20/million BTU. The Price in the U.S. is just under $12/million BTU, almost the lowest in the world.

    . (NextPage)

    .

    oil companies are cheap

    .

    asked: Why do you and.
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