Goldman: Still Bullish on Oil

Oil prices are sliding for a second day, spurring talk that a bubble in energy has finally been punctured.

Not so fast, says the oil market's superbull, Arjun Murti, an analyst with Goldman Sachs. In the last two days, crude oil futures have tumbled to below $108 a barrel on relief that Hurricane Gustav spared rigs and refineries and on signs of a global economic slowdown. But Murti is still sticking with his forecast that oil will be heading back toward $149 a barrel by the end of the year.

"We continue to expect that strong Chinese buying will return to the market as China restocks after the Games." Murti wrote to clients, according to ClusterStock.

Murti made news in 2005 when he wrote that the oil market had entered the early stages of a multiyear super-spike period. Oil, then about $50 a barrel, could climb to $105 a barrel, he said. In March of this year, oil traded above $105 for the first time ever.

Earlier this year, he said $200-a-barrel oil was a possibility in the face of a major disruption of supplies or a recovery in the U.S. economy.

In the latest note, Goldman analysts point to the loss in oil supply as a result of an explosion at the BTC pipeline in Turkey last month, a shutdown in Angola, and the disruption caused by Hurricane Gustav, CNBC reports.

Of course, Goldman Sachs is a major commodities trader, and conspiracy theorists, including some in Congress, have accused the firm of helping create a bubble in oil prices.

Still, Murti is someone to pay attention to, even by oil bears.

Fadel Gheit at Oppenheimer, the dean of energy analysts, told BusinessWeek.com that "oil prices are dropping because they are inflated."

Yet he added: "I have no idea where oil prices are going from here. Go ask Goldman Sachs."