http://www.bloomberg.com/apps/news?pid=20601081&sid=a5Tz4LdAYOiE&refer=australia
Oil Rises After Morgan Stanley Says Brent Oil May Reach $150
By Mark Shenk
May 28 (Bloomberg) — Crude oil rose more than $2 a barrel after Morgan Stanley said that Brent oil from the North Sea could “easily” reach $150 a barrel.
Prices are rising because “supply constraints are biting against the backdrop of still-strong global demand,” Richard Berner, co-head of global economics at Morgan Stanley, said in a report today. Oil rose last week after Societe Generale SA and Credit Suisse increased their price outlooks.
“When these price forecasts come out, traders don’t want to be short, so they are in a way self-fulfilling prophecies,” said Sarah Emerson, managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Massachusetts. Shorts are bets that prices will fall.
Crude oil for July delivery rose $2.18, or 1.7 percent, to settle at $131.03 a barrel at 2:51 p.m. on the New York Mercantile Exchange. Oil climbed as high as $131.58 and fell as low as $125.96 today. Futures reached $135.09 on May 22, the highest since trading began in 1983.
“Prices are swinging wildly back and forth, which indicates that the market needs to find equilibrium,” said Kyle Cooper, director of research at IAF Advisors in Houston.
Brent crude oil for July settlement rose $2.62, or 2 percent, to settle at $130.93 a barrel on London’s ICE Futures Europe exchange. The contract touched a record $135.14 on May 22.
Oil advanced above $127 for the first time on May 16 when Goldman Sachs Group Inc. boosted its estimate for the second-half of the year to $141 a barrel, from $107, citing supply constraints. Goldman analyst Arjun N. Murti wrote in a report on May 6 that “the possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months.”
$150 Brent
“While prices are high enough to curb demand in the developed economies, we think that supply limits could easily take Brent crude quotes to $150 a barrel,” Berner, who is based in New York, said in the report. Morgan Stanley is the second- biggest U.S. securities company.
The Movement for the Emancipation of the Niger Delta, Nigeria’s main militant group, threatened attacks and car bombings tomorrow in the Niger Delta to mark the first anniversary of President Umaru Yar’Adua’s inauguration.
MEND, which has shut down about 20 percent of Nigeria’s oil production since February 2006, has increased its assaults on the country’s oil infrastructure since April. Nigeria was the fourth- biggest source of U.S. oil imports during the first three months of this year, according to the Energy Department.
Dow Chemical Co., the largest U.S. chemical maker, will raise prices on all of its products as much as 20 percent because of surging costs for energy, raw materials and transportation.
The increases are needed after a 42 percent jump in first- quarter spending on raw materials and energy, Chief Executive Officer Andrew Liveris said today in a statement. The increases take effect on June 1, Midland, Michigan-based Dow said.
Dow is trying to pass on higher costs amid company forecasts that spending on energy and hydrocarbon-based ingredients will climb to $32 billion this year, a fourfold increase from 2002.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
Last Updated: May 28, 2008 16:30 EDT
Tags: brent crude, gas crunch, gas prices, inflation, long term, morgan stanley, oil, oil prices, peak oil, supply shortage
