Why Low Oil Prices Won't Last

In the midst of last week's market turmoil, there was one piece of good news. Oil prices, which had neared the $150 mark just a few weeks ago, fell back below $100, mainly due to fears about sharply slower global growth as the financial crisis on Wall Street deepens. But it's way too early to buy that SUV. Goldman Sachs analyst Arjun Murti, the oil bull who first called the major price run-up last year, is holding firm to his prediction that oil could go back to $140 by next year. "Bipolar oil-market psychology has moved from extreme bullishness to extreme bearishness," he noted, but the fundamentals remain the same, namely that emerging markets are still growing fast. Goldman predicts that better-than-feared Chinese demand post-Olympics, coupled with a pickup in U.S. demand as prices fall and the need to restock low inventories around the world, will buoy oil sooner rather than later. Murti's recommendation? Buy energy stocks.

Why Low Oil Prices Won't Last | World