Oil price trends through 2004-2010

By Andrew McKillop

Recent headline data from the OECD’s IEA, the US EIA, and data from leading oil analysts concerning world production and inventory stockbuild in key consumer countries, together with ‘traditional’ claims by certain analysts that OPEC is still able to ’overproduce’, is taken by some commentators as offering a prospect for oil prices sliding below current, rising price levels in the region of about 36 – 45 Euro/barrel (45 – 55 USD/bbl), perhaps by mid-2005. Optimism regarding nonOPEC supply growth is however muted at this time, with the only major upturn to counter nonOPEC production decline by its 3 largest OECD producers (USA, Norway, UK) coming in the shape of Azerbaijan-Turkey pipeline deliveries from Caspian region producers. Deliveries are slated to build to not much above, and probably less than 2.5 Million barrels/day (Mbd) from Spring 2005. World demand growth remains very strong – at about 3%/year or 2.5 Mbd per year – with exceptional growth being recorded not only in the emerging industrial superpowers of China and India, but also in East Europe, USA and West Asia.

PetrolemWorld

Oil price trends through 2004-2010

By Andrew McKillop

Recent headline data from the OECD’s IEA, the US EIA, and data from leading oil analysts concerning world production and inventory stockbuild in key consumer countries, together with ‘traditional’ claims by certain analysts that OPEC is still able to ’overproduce’, is taken by some commentators as offering a prospect for oil prices sliding below current, rising price levels in the region of about 36 – 45 Euro/barrel (45 – 55 USD/bbl), perhaps by mid-2005. Optimism regarding nonOPEC supply growth is however muted at this time, with the only major upturn to counter nonOPEC production decline by its 3 largest OECD producers (USA, Norway, UK) coming in the shape of Azerbaijan-Turkey pipeline deliveries from Caspian region producers. Deliveries are slated to build to not much above, and probably less than 2.5 Million barrels/day (Mbd) from Spring 2005. World demand growth remains very strong – at about 3%/year or 2.5 Mbd per year – with exceptional growth being recorded not only in the emerging industrial superpowers of China and India, but also in East Europe, USA and West Asia.

World oil stocks, depending on country and using periodic data from the IEA, EIA and oil analysts, in fact remain well below average figures for the 2000-2003 period. Combined with recent – extreme – figures from the IEA for world oil production (well over 82 Mbd) the overall reading is that world oil markets will remain tightly supplied with generally uptrending prices, right through the period to 2010.

The base for this situation is in particular world demand growth. This ‘vintage’ growth has been consistently underestimated, now, for more than 2 years, not only by the oil majors and national economic forecasting institutions, but also by the major oil importer country agencies (IEA and EIA). These two agencies, in their periodic publications and data series, have continued to forecast slower demand growth as being likely ‘going forward’, while they publish real figures for the present day and real world that show ‘vintage’ growth in nearly all markets!

More at
http://www.petroleumworld.com/SunOPF112104.htm