Oil Demand Down, Supply Up

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In sum, it seems like the world should be well supplied with oil in 2008 and 2009 as my recent megatrends analysis indicated and as other analysts have also indicated. It appears that the Saudis are quite happy to see oil prices come off their recent high - not a surprise since the King went so far as to call a global meeting some months ago of oil ministers to devise plans for reducing the price of oil.

Recent estimates by the The International Energy Agency [IEA] and OPEC both point to slightly reduced global oil demand due to the impact of higher prices and lower economic growth in the OECD countries, primarily the U.S. The IEA indicated in a report that oil demand will grow 690 kb/d in 2008 and 890 kb/d in 2009. The Oil and Gas Journal (8/25/08, p. 68) reports that OPEC has reduced its estimated global growth rate by .1% for 2008 and warned that 2009 oil consumption could fall. Demand for oil has been reduced most in the U.S. where consumption during the first 7 months of 2008 fell 3.8% or 800 kb/d. World oil consumption in 2008 was forecast by OPEC to grow by 1 mb/d, down just 30,000 b/d from a prior forecast and is estimated to grow 900 kb/d in 2009, the lowest rate since 2002. Oil demand is continuing to grow in oil exporting countries, China, India, and other developing countries...

In sum, it seems like the world should be well supplied with oil in 2008 and 2009 as my recent megatrends analysis indicated and as other analysts have also indicated. It appears that the Saudis are quite happy to see oil prices come off their recent high - not a surprise since the King went so far as to call a global meeting some months ago of oil ministers to devise plans for reducing the price of oil. Many oil producing countries seem to want to protect the $100 per barrel price, but the Saudis seem not to be in that camp. So for the moment at least there is a split among the world’s major oil producers as to what price outcome is desirable. Supply and demand dynamics through 2009 do not seem favorable to those who want higher prices.

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