Credit Suisse has joined the choir and is upping their short and long-term oil estimates. While they were agressive in their revisions and see $100 oil long-term, CS’s numbers imply they still think a short position at today’s $125 is the correct call, but we suspect this is a bit of having cake / eating, too:
We are raising oil prices significantly: Our 2008 WTI forecast is now $120/bbl from $91, and our 2009 forecast is $110/bbl from $90. We raise the band of expected prices in the Plateau phase to $90-$150 (from $70-110/bbl published March 3rd). Based on continued restrictions in access to resources and on further visible cost inflation (mainly in steel and labour), we raise our longer term forecast to $100/bbl from $75/bbl.
The revisions are predicated on three issues:
- CS did not think current oil price levels sufficiently dented demand growth; they are still waiting for the plateau to do that.
- Despite the lack of a pronounced change in demand, demand patterns are changing and CS expects these changes “to continue and deepen”.
- The supply picture looks more challenged than even a few months ago. They are seeing “the emergence of a ‘doughnut hole’ in non-Opec supply from 2010-2015”.