Oil Demand Will Soon Exceed Supply Capacity

July 16th, 2011
in econ_news

OIL-NORTH-AFRICA Econintersect:  A number of sources have warned that global oil supplies are rapidly approaching the point at which demand will not be met.  The U.S. Energy Information Agency made such projections for the problem to be manifest within the next year or two in their annual report in April.  The International Energy Agency estimates the problem with be with us within a matter of months, rather than years.  Today a Barclay's spokesperson gave their view of the details to Bloomberg, saying that Libya is at the crux of the problem. See video below.

Follow up:

The following video, courtesy of Hillbent.com, shows the Barclay's interview:

Oil-Barclays

 

From the Shanghai Daily:

Shortages of Libyan crude helped push up oil prices earlier this year to the highest levels since 2008. Those concerns resurfaced yesterday, as Barclays Capital said Libya's oil industry will be disrupted for longer than expected. Its daily exports of 1.5 million barrels were shut down when an anti-government uprising swept the country. The conflict has turned into a stalemate, and Barclays says it will take years - not months - for Libya to restore exports to previous levels.

That means spare production capacity for Saudi Arabia and other major oil producers "will get eroded very quickly," Barclays analyst Helima Croft said. "In that event, the pressure on prices will be substantial" as supplies tighten.

The 5 Min. Forecast has presented graphs summarizing the forces acting on the petroleum market.  The first shows their net of the decay of excess supply capacity for oil:

Oil-WhatSpareCapacity

What about the Strategic Petroleum Reserves?  The graph below shows just how long the recent release affected the price of oil:

Oil-SPR-Release-StrategicallyMeaningless

The growth in demand is no longer something that theU.S. can control, as shown in the following graph.

OilDemand


Sources: Shanghai Daily, U.S. Energy Information Agency Annual Report, April 2011, International Energy Agency Report July 13, 2011, Hillbent.com and 5 Min. Forecast









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