Goldman: We Give Up

Goldman: We Give Up On Guessing Oil Prices!

Joe Weisenthal | Nov 20, 08 4:46 PM

Last month, Goldman finally admitted that its "super-spike" theory was wrong, and that oil was not going to $200 anytime soon. In a major 180, it said that oil could hit a low of $50 as early as December. Well that came a lot sooner than anticipated, and $50 may soon be a thing of the past. Where's it going now? Goldman has no clue. They're giving up:

TechTraderDaily: On Thursday, Goldman said it was ”closing” its recommendations for oil trades. Meaning that in a perilous time when the traders who pay attention to Goldman’s recommendations could use some guidance the most, Goldman has opted to give them the least. And some traders are furious about it, comparing the maneuver to then-strategist Abby Cohen’s decision to abandon her targets for equity indexes in the fall 2001, citing the uncertainties abounding in the market. Goldman specifically talked about four trade recommendations it previously issued, and said clients shouldn’t put any stock in them any longer.

Are traders really that furious? Goldman's advice wasn't worth that much, and if they say they don't know where oil prices are going, then they probably don't. There's reason for them to keep giving out forecasts, when they have no confidence in them.

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18 Comments

clickbot said:

Nov. 20, 5:12 PM

What does a bank holding company know about oil prices anyway?

Now give me my free checking and toaster.

Desmondo said:

Nov. 20, 5:45 PM

clickbot@, Awesome!

Joe Weisenthal said:

Nov. 20, 5:51 PM

Agreed. Right on.

Anthony J. Alfidi (URL) said:

Nov. 20, 7:02 PM

Try making a prediction six days out insted of six months and they might be okay.

rich b. said:

Nov. 20, 7:39 PM

at least i don't have to hear "peak oil" for a while.

oh, god, i hate that term.

do you think anyone @ Goldman ever heard of mean regression?

can we get past paired trades yet?

Joe Weisenthal (URL) said:

Nov. 20, 8:40 PM

Agreed, Rich, I love that we never hear the term peak oil anymore.

adam d. said:

Nov. 20, 8:52 PM

all your bubbles are belong to us ...

all the the mortgage collateralized trading strategies are winding down. so no more commodity bubbles and no more need to push expectations.

mb said:

Nov. 20, 11:02 PM

Thats a containership in the picture, not an oil tanker.

johny boy said:

Nov. 21, 4:08 AM

the reason Goldmans was predicting $200 a barrely is because they had massiev positions in oil and what to profit handsomely. They were using the positing in the market to abuse it.

lalala said:

Nov. 21, 5:16 AM

the theory isn't wrong, it's just the demand that is collapsing. Price of oil will steeply go up when gobal growth returns.

johny boy said:

Nov. 21, 5:33 AM

@ lalala

do you honestly believe that we've seen a 60% fall in the DEMAND for oil in less than half a year? It's all speculation, the priced boom because speculative capital flooded into the market. Now that the commodities bubble has popped capital is fleeing. The underlying economic situation is just an excuse.

Joe Weisenthal (URL) said:

Nov. 21, 7:35 AM

@lalala
So you're saying that peak oil isn't wrong... it's just useless for forecasting oil.

lalala said:

Nov. 21, 8:13 AM

well, it wouldn't be useless if there wasn't so much speculation on commodities.

bubble oil said:

Nov. 21, 9:40 AM

Of course Jeffrey Currie who wrote all this garbage was one of the recently announced partners.
Goldman always was the absolute meritocracy!!!!!

BSD said:

Nov. 21, 10:37 PM

Joe, forecasts of oil price dynamics around the time of the global Hubbert peak clearly assume that the crude oil demand either remains constant or increases. If demand falls faster than production then obviously the expected decrease in oil production would not cause the price of oil to rise.

So yes, peak oil is useless for forecasting the price of oil if the world experiences the financial equivalent of a nuclear winter.

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