'super spike' oil analyst gains a lot of wall street cred

Arjun Murti remembers the pain of the oil shocks of the 1970s. But he is brace for something far worse now: He foresees a "super spike" - a price surge that will soon drive crude oil to $200 a gun barrel.

Murti, who has a bit of a green run, is not bothered much by the prospect of even higher oil terms, figuring that it might eventually prompt the United States to become more energy efficient.

An analyst at Emma Goldman Sachs, Murti has become the talk of the oil marketplace by issue one sensational forecast after another. A few years ago, challenger scoffed when he predicted that oil would breach $100 a gun barrel.

Few are laughing now. Oil shattered yet another record wed, as the price of light sweet crude for July bringing rose above $132 on the New York Mercantile Exchange. Terms are 99 percentage higher than a year ago, according to Bloomberg News.

Murti, 39, argues that the world's apparently unquenchable thirst for oil means terms will keep rise from here and stay above $100 into 2011. Others disagree, controversy that terms could suddenly tumble if speculators in the marketplace rush for the exits.

But the grim concretion of Murti's anticipation, issued in March and reconfirmed two weeks ago, is sufficiency to give any American pause: At $200 a gun barrel for oil, gasolene could cost more than $6 a gal, or about $1.60 a liter, in the United States. U.S. Pump terms are now about $4 a gal.

That would be fine with Murti, who owns two loanblend cars.

"I'm really fairly anti-oil," said Murti, who grew up in New t-shirt. "One of the biggest challenges our state faces is our dependence to oil."

Murti is barely alone in predicting higher terms. T.Boone Pickens, the oilman turned corporate raider, said Tuesday that crude would hit $150 this year.

But many analysts are no longer so sure where oil is going, at least in the short term. Some say prices will fall as low as $70 a barrel by year-end, according to Thomson Financial.

Experts disagree over the supply of oil, the demand for it and whether recent speculation in the commodities markets has artificially raised prices.

Whatever the case, oil industry analysts like Murti have suddenly taken on the aura that enveloped technology analysts in the 1990s.

"It's become a very fashionable area to write about," said Kevin Norrish, a commodities industry analyst at Barclays Capital, which began predicting high oil prices around the same time as Goldman. "And to try to get attention from people, people are coming out with all sorts of numbers."

This was not always the case. In the 1990s, oil research was a sleepy area at banks. Many analysts assumed that oil prices would hover near $15 to $20 a barrel forever. If prices rose much above those levels, they figured, consumers would start conserving, suppliers would raise production, or both, causing prices to decline.

But around the turn of the century, oil company after oil company started missing predicted production figures. Murti, who covers oil companies like ConocoPhillips and Valero Energy, decided to study the oil spikes of the 1970s.

Since starting his career at Petrie Parkman, a Denver investment firm acquired by Merrill Lynch in 2006, he had been conservative in his calls on oil. But by 2004, he concluded that the world was headed for a long supply shock that would push prices through the roof. That summer, as oil traded for about $40 a barrel, Murti coined what has become his signature phrase: super spike.

The following March, he drew attention by predicting that prices would soar to $105, sending shock waves through the market. Angry investors questioned whether Goldman's own oil traders benefited from the prediction. At Goldman's annual meeting, Henry Paulson Jr., then the bank's chief executive and now the U.S. Treasury secretary, found himself defending Murti.

Over time, Murti was proved right again. Oil crossed $100 a barrel in January and closed above $100 for the first time in February. Murti's forecasts now feed into many of Goldman's economic and corporate forecasts, affecting the research of companies like Ford Motor and Procter & Gamble. His research is distributed widely among investors.

"Even if you disagree with their views, the problem is that Goldman does carry so much credibility," said Nauman Barakat, senior vice president for global energy futures at Macquarie Futures USA. "There are a lot of traders who are going to buy based on their reports."

His sudden fame unsettles Murti. He rarely grants interviews, citing concerns about privacy, and he declined to be photographed for this article. He is not the bank's only petroleum prognosticator: Jeffrey Currie predicts oil prices out of London.