Thursday, June 10, 2004

Global oil prices ticked upwards again today, but this time its all about the "fundamentals".
The International Energy Agency increased its estimate of global demand for oil this year by 470,000 barrels per day to a total of 81.1 million bpd owing particularly to strong first-quarter demand in India and Brazil.

Demand for oil would probably total 81.1 mbd this year from 78.7 million bpd last year and 77.0 mbd in 2002, the agency said.

"It's demand that's really driving the price, sucking up any additional supply," Investec analyst Bruce Evers said.

"And you've got OPEC producing very close to its full capacity," he added.
Note especially the estimates that the IEA is making for the fourth quarter of this year. World oil demand should be around 82.5 mbd, a 2% rise in demand over 2003:IV. The trouble is, however, that world oil supply is forecast to be under 82 mbd.

Forget saboteurs in Iraq, terrorism in Saudi Arabia, strikes in Nigeria or right-wing coups in Venezuela. Supply and demand are enough to put the big squeeze on the global economy, as well as craft one hell of a tipping point for men with bombs to exploit.

Buy those forward contracts on your winter heating oil now!

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