Sep. 28, 2007

Oil Production Down By 1 Million Barrels Per Day - Despite Rising Number of Oil Rigs in Saudi Arabia

Two weeks ago, OPEC's oil chief, Abdalla Salem El-Badri, told the world that $80 oil won't last now that OPEC has increased production: "the fundamentals" he said, "do not support the price."

However, this graph , posted by Stuart Staniford from the Oil Drum showing Saudi oil production in 2006 compared to the number of oil rigs entering the country tells a different story. The oil rigs entering the country increased sharply, while oil production continued to drop.

Now we have this from Goldman Sachs: "We believe the current price rally is critically different from last year's, as the fundamentals are substantially crude oil production is over 1 million barrels per day lower than last year, while demand is over 1 million bpd higher.

From what I've been reading recently - officialdom is starting to sound a lot like the peak-oil crowd did a couple of years back.

The International Energy Agency, adviser to 26 industrial nations, said
last week that consumption of energy would outpace new production for the next
five years, leading to a supply crunch in 2012.

"The results of our analysis are quite strong," said IEA oil analyst
Lawrence Eagles. "Something needs to happen. Either we need to have more
supplies coming on stream, or we need to have lower demand growth."

It's starting to look as though Matthew Simmon's declaration from 2005 that Saudi Oil has peaked may have been bang on.

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