While Lehman Brothers (LEH) itself is still a punching bag, their oil analysts never followed Goldman’s Arjun Murti with $150 oil predictions like the rest of Wall Street. Instead, they’ve expressed shock at the extent of the price spike and stuck with their prediction that prices would soon recede.
Now, with oil almost 20% off its recent record-highs, Lehman Brothers chief energy economist, Edward Morse, reiterates his bear case. He sees oil going to $90 by early 2009:
The market’s expectations have changed very rapidly and unexpectedly…The market went out of control on the upside. But market participants realised there was much more demand destruction than had been thought even a month ago, that inventories are building up quickly, and that, in fact, more supplies are coming onto the market…The deteriorating demand picture reinforces our belief that oil prices are approaching a tipping point.
The current dip seems to have emboldened bears. Chakib Khelil, President of OPEC, claimed oil would be as low as $70/barrel if not for for the weak dollar and Iran’s threats and posturing.
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