Analyst sees oil surging to $200

…On Monday, Matthew Simmons, chairman of investment bank Simmons & Co. International, said at a conference oil prices “will go through $200 a barrel like a hot knife through butter.”

Doug Porter, deputy chief economist for BMO Capital Markets, said Tuesday $200 oil would probably cause a global economic slowdown that would push the weak United States economy into a deep recession and sideswipe Canada as well.


“Up to this point, the global economy has held up remarkably well in the face of oil prices going from $20 to over $120 but I think that added increase (to $200) over such a short period of time would prove to be a tipping point for global growth, especially in North America.”

Consumers would see higher energy prices and higher inflation, Porter said, but some prices would fall simply because energy costs would deplete family budgets to the point that there would be less demand for discretionary items such as clothing, electronics and appliances.

…Jim Burkhard, global oil group managing director for Boston-based Cambridge Energy Research Associates, said his firm released a “break point scenario” (one of three predictions based on events) in late April that envisioned oil at $150 US.

“There are many similarities with what we’re seeing today,” he said.

“In an environment with little spare capacity, with sluggish oil supply growth, momentum builds toward ever higher oil prices.”

Burkhard said it’s conceivable prices could hit $150 US within a year, which would hurt consumers in the U.S., Canada and Europe.

“In the Middle East and China, where prices are subsidized, the governments there could decide to maintain those subsidies, but it would be increasingly difficult.”

Calgary Herald