Why oil’s all-time high is just the start

When Goldman Sachs analyst Arjun Murti wrote a note to clients two years ago predicting a superspike in oil, most of the analyst community were sceptical. Murti was one of the first to forecast an oil price above $100 a barrel.

However, I suspect Mr Murti is now laughing at his detractors


He argued that the US economy was now less reliant on oil so the nominal price for a barrel would have to hit $105 for it to prompt a significant move to reduce consumption. However, he added to this view in December 2006. The Goldman analyst said that his $105 a barrel estimate may even be conservative if the peak oil theory was correct.

Now, as I have noted before in this column, analysts never seem to forecast the oil price correctly. Indeed, in January this year, many analysts were predicting that the oil price would retreat below $50 a barrel; how wrong they were. Now, more and more of the overpaid spreadsheet people are starting to accept the inevitable