Transcripts

Oil Prices Rise To The Upside

PAUL KANGAS: A volatile session in the oil markets today. September crude futures closed up $0.45 to $114.98 a barrel after trading at nearly $116 earlier. Underpinning oil prices today was word that Goldman Sachs repeated its year-end price target of $149 a barrel. As Suzanne Pratt reports, oil price predictions are all over the map.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: What is it that Goldman Sachs sees in world oil markets that many other experts currently don't see? Quite simply, a new high for crude prices this year. In a note to clients, Goldman's energy team reiterated that oil fundamentals suggest a return to rising oil prices. The Wall Street heavyweight is maintaining its year-end price target of $149 a barrel. Goldman's prediction is surprising when you consider oil prices have plunged more than 20 percent in the last month, partly on concerns about waning global demand and partly because of the stronger dollar. Oil expert John Kilduff says even though he expects Chinese oil demand to pick up after the Olympics, he does not see crude prices meeting Goldman's lofty prediction.

JOHN KILDUFF, SR. VP, ENERGY, MF GLOBAL: It's obviously very aggressive. In my view, it would take a real confluence of events, a slew of bad news for consumers for us to get back there. I don't see us getting back that high, although I don't see us going much lower from here either.

PRATT: But other experts strongly agree with Goldman's projection. Oil trader Ray Carbone thinks prices will move significantly higher.

RAYMOND CARBONE, OIL TRADER, PARAMOUNT OPTIONS: I think the market is very oversold. too many geopolitical risks out there for me to be selling oil in the $112 area. So, I think Goldman's track record is exemplary. I wouldn't want to bet against them.

PRATT: There are a few other concerns swirling around in the market that might lift prices in the coming months. First, geopolitical tensions between Georgia and Russia, the world's largest non-OPEC producer, could escalate further. If that happens, supply could be affected. Secondly, the changing calendar is likely to lead to increased demand.

CARBONE: Remember, we're going into the winter. We're going into heating oil season. It's not optional, like driving is. People will heat their homes and must heat their homes.

PRATT: While opinions differ as to where oil prices are headed, there is some agreement as to the role of the dollar in the world's energy market. Many experts predict the greenback will be less of a factor for energy prices in the coming months. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.