Back in July 2006, I set a price target of $125 on oil and I gave it two years. Back then, oil was at $75 a barrel. My reasons were simple:

1) Demand from developing nations including China.

2) No addition to the world oil supply.

3) Geopolitical concerns in Iraq, Nigeria and Venezuela.

4) A commodity bull cycle which is far from over.

My prediction on this price target holds true as we are just $2 short of the $125 mark in less than 2 years since that post. Back then, I received plenty of opposition to my post. While the headline “Oil is Cheap” might not have held true to historical prices, what I meant all along was that oil was cheap back then relative to the price of oil in the future. And guess what? I think oil will be higher in two years than it is now. I think in two years, we will be closer to $200 and gasoline will be $5 in California.

– Faisal Laljee

Full Disclosure: I do not own oil as a commodity or any of the oil ETF’s although my position can change anytime without notice.

Related Stories:

Tags for this Post:
Barrel Oil, China, Commodity, Current Market News, Developing Nations, Energy Markets, Full Disclosure, Gasoline, Iraq, Nbsp, Nigeria, Oil Etf, Opposition, Price Of Oil, Price Target, Venezuela, World Oil Supply