EIA Data Indicates Decreasing Supplies of Crude Oil; Gasoline Demand Higher
Days Supply of Crude oil Declines 3.2% YoY; Gasoline Demand Rises 0.4% YoY
The daily price of NYMEX crude oil for the last week of December 2004 was approximately $42.50 per barrel. Today the daily price is quoted at $57 a barrel. This is a 34% increase in the price of crude oil over the two year span. Even with oil prices rising over 34% during this period domestic crude oil production has managed to slip 1.1%.
This is a phenomenon not unique only to the United States. Rather, it is a challenge facing every oil field in the world. The most notable field is that of Ghawar, the world's largest. It is located in Saudi Arabia and has been in production since 1951. It is a tired old field that is over 55 years old.
Crude oil imports have declined 695,000 barrels per day or 6.8% from 10.134 million bpd in the year ago period to 9.439 million bpd in the current 4 week average.
In conclusion we have a process in which crude oil supplies are becoming tighter as a result of natural declines in domestic production and cuts in OPEC production. Domestic demand for gasoline continues to rise. The increased demand also serves to reduce supplies as is evident in the declining days supply of crude oil. If Oil prices stay in the mid 50's for any duration expect OPEC to announce another cut in order to defend $60 oil.
Days Supply of Crude oil Declines 3.2% YoY; Gasoline Demand Rises 0.4% YoY
The daily price of NYMEX crude oil for the last week of December 2004 was approximately $42.50 per barrel. Today the daily price is quoted at $57 a barrel. This is a 34% increase in the price of crude oil over the two year span. Even with oil prices rising over 34% during this period domestic crude oil production has managed to slip 1.1%.
This is a phenomenon not unique only to the United States. Rather, it is a challenge facing every oil field in the world. The most notable field is that of Ghawar, the world's largest. It is located in Saudi Arabia and has been in production since 1951. It is a tired old field that is over 55 years old.
Between late December 2004 and today gasoline demand has increased 1.1% from a 4 week average of 9.238 million barrels per day to 9.340 million barrels per day. Gasoline demand increased even though the average price in the U.S. increased 31.6% from $1.77 to $2.33 during the same time period. Whoever says rising prices will kill demand is lying. This is precisely why peak oil is an event that provide longterm investors the money making opportunity of a lifetime.
Days supply of crude oil has decreased from 21.3 days in the year ago period to the current 20.6 days. This is a 3.2% decline. Gasoline demand has increased from 9.30 million bpd to 9.34 million bpd. This is an increase of 0.4% YoY.Crude oil imports have declined 695,000 barrels per day or 6.8% from 10.134 million bpd in the year ago period to 9.439 million bpd in the current 4 week average.
In conclusion we have a process in which crude oil supplies are becoming tighter as a result of natural declines in domestic production and cuts in OPEC production. Domestic demand for gasoline continues to rise. The increased demand also serves to reduce supplies as is evident in the declining days supply of crude oil. If Oil prices stay in the mid 50's for any duration expect OPEC to announce another cut in order to defend $60 oil.
posted by -Aztec- at 11:35 AM
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