Phil Flynn talks oil.....
"The Energy Report for Tuesday, October 14, 2008
Spooky! Get the knifes out. It's slasher time. October is a time for scary markets and scary movies. Well Goldman Sachs is appearing in their own scary movie as they slash not only their forecast for oil but their forecast for a slew of energy stocks.
"We have underestimated the depth and duration of the global financial crisis and its implications on economic growth and commodity demand." So says Goldman Sachs in their latest prediction for energy. Yes, Goldman Sachs, which is the same Goldman Sachs that predicted the Super Spike in oil in 2005 and was the medias most raging bull. Of course The Energy Report was more bullish way back to 1999 and I was the most bullish analyst on the street in the early years of the run. In fact when Goldman called for the Super Spike in oil, the bull market that started in 1999 was already well underway. Even this year Goldman was calling for a spike in oil to $150 to $200 and came close when oil peaked just above $147. Yet even as the credit crisis unfolded Goldman seemed to be touting its bullish position until yesterday that is when they it finally had to cut their year-end U.S. crude oil target to $70 a barrel.
Goldman was not alone. Many other analysts and firms have reduced their price forecasts and are now facing reality. Still, I have to give the Goldman analysts kudos for a great call and a great run. As I all too well know that no one is 100 percent in the oil forecasting game. Early this year I was alone calling for the end of the oil bull and a bit premature. Yet I now have the satisfaction of knowing I was correct about the shift of fundamental factors that would turn this bull to a bear, albeit a little early. Life as a lone bear has been beautiful since early July and should continue to stay sweet into the end of the year.
A rebound in stocks should rebound the oil yet the trend for oil should still be down. Yesterday we said that oil might be sold near the 84 to 85 level. We are close to that overnight. We are also entering option plays as well as product and gas plays. Please call me or a member of my team for the latest developments. You can reach me at 800-935-6487 or you can email me at
pflynn@alaron.com to open your account."