Economy could be hurt if oil gets to $100 -Roubini

By Barani Krishnan NEW YORK, Nov 4 (Reuters) - An economist noted for his early warning that the United States was headed for a housing bust and oil shock said on Wednesday that oil's jump to $80 a barrel is unjustified and that a run to $100 may cause economic stress the way record highs near $150 did last year. "Part of the rise may be justified by global economic recovery...but going from $30 to $80 when demand for oil is down to 2005 levels is very difficult to justify," said Nouriel Roubini, chairman and co-founder of the RGE Monitor newsletter on the economy, said at a commodities conference in New York. U.S. crude prices have jumped almost 150 percent to above $80 a barrel since plumbing to a 2009 low of $32.70 a barrel in January. "If oil goes to $100 today, it will have the same effect on the global economy as what $147 oil had last year," said Roubini, referring to the price oil stood at before the U.S. financial crisis escalated into a global recession in 2008. U.S. crude oil settled up 1 percent at $80.40 a barrel on Wednesday after the Federal Reserve said it planned to keep interest rates at near-zero levels for "an extended period" to help usher the economy out of recession. The market also rose on an unexpected decline in weekly U.S. crude inventories, government data showed. Oil's latest rally has been fueled largely by a weak dollar even as crude inventories stand near multi-year highs in the United States, the world's No.1 energy consumer. Roubini, an economics professor at New York University, has argued in his writings that the near-zero U.S. interest rates had led to a massive dollar-selling and other asset buying which had created new investment bubbles that could not be economically sustained. "The price increase we have seen is too much, too fast," Roubini told the commodities conference. "Think what happened to oil last year. It went up not because of fundamental reasons like demand but because of a bubble." "Today, we have new bubbles because of a wall of liquidity created by the massive dollar carry trade," Roubini said, referring to investors' use of a weak dollar to buy high-yielding assets -- a practice he said had made almost every trader "look like a genius". (Reporting by Barani Krishnan; Editing by David Gregorio) ((For help: Click "Contact Us" in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: Keywords: OIL ROUBINI ([e-mail]; + 1 646 379 6629; Reuters Messaging [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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