How Now, Gold Cow?

So, I wrote a book…but I have not been goodly enough to do much blogging about it. This was not intentional. This was mainly because of the furious pace of travel, lawsuits, the odd threat — and the fact that I was serving full time as a journalism fellow at the University of Colorado at Boulder, trying to do my best to live a quiet life. I have since made amends, and will be writing regularly about my continuing fascination with sins of affinity and cultures of corruption. Healthy stuff like that.

Let’s start today with Goldman Sachs letting us all know that oil supply is headed for levels that are “critically tight,” sending prices in the U.S. up to nearly $100 again and in Europe still higher. This contrasts somewhat with the bank’s remarks in April that “supply-demand fundamentals are significantly less tight,” made by the bank’s chief energy analyst David Greely. At the time, this prodded oil prices into a temporary swan dive that proved a good buying opportunity for — some would say — Goldman. Mind you, oil supplies in the U.S. have been near their upper limits for most of the year, so not sure what the rumpus is about.

By May, however, Goldman pulled an about-face with its global head of commodities strategy, Jeffrey Currie, predicting that the loss of oil production due to the conflict in Libya would cause oil prices to surge. On cue, they did. Never mind that the Libyan conflict began in February, raging throughout Goldman’s projection of a price crash. Or that Libyan oil production has been a tiny drop in the global bucket (1.6 million barrels a day to the 20 million-plus a day consumed by the U.S. alone).

All told, Goldman’s prediction came just a few weeks after the bank told its clients to dump their oil investments. It makes one wonder which bank doubling as the world’s largest commodities trader was buying oil during that time?

Today, Goldman has forecast oil will keep climbing well into 2012 as the economy recovers. Time to get back on the buyer’s bandwagon for those who so far have managed to stomach the Goldman whiplash.

Putting it another way, if you were a long-term bull in the oil market — which Goldman says it is — but the price was getting, shall we say, a tad rich, would it not be a good idea to scare up some losses in order to buy big on the dip?

Of course, maybe that’s not what happened. I’m just sayin’.