Global oil summary

Have to apologise for my quick cut and paste effort with the OPEC report.
We are still seeing a shrinkage in demand which has pushed us back to around 85m barrels a day and believe it or not but it looks like OPEC is actually doing what they set out to do and all OPEC members except Iraq have cut oil output in January by almost a million barrels a day. According the OPEC report supply now sits at around 84.55mb/d and OPEC cut backs seen it go from producing 29,669,000 barrels a day to producing 28,710,000 a total cut of 959,000 barrels a day. This should leave a short fall of around 520,000 barrels a day based of demand at 85.13mb/d and we should start to reduction in some of the world oil stock piles and hopefully followed closely by an increase of the oil price.

Other things to keep an eye on are the current world oil decline rates.
Russia in steep decline
Mexico in steep decline
Norway in steep decline
North Sea in steep decline
Iran in steep decline
A big eye opener for me was when it was reported in the IEA monthly report that said Australia was called on to increase its production rates to sure up world demand. Australia is famous for lots of things but oil production it’s not famous for.
With the current world oil price and tight credit markets investment in exploration have all but dried up. Here a snippet from the January IEA report; It is still too early to form a definitive view on the extent of cuts in capital expenditure or strategic project slippage due to the combined impact of the financial crisis, a contraction in oil demand and significantly lower oil prices. Many companies have only just started to outline their capex plans for this year and beyond.However, anecdotally the message is fairly stark, even if the impact may be felt more squarely on future, rather than 2009, production. For example, Singapore rig builder Keppel has announced that two orders for new rigs have been cancelled as a result of the credit squeeze. We note elsewhere Saudi Arabia slipping of two of its next generation of capacity expansion projects, and more generally, analysts at Barclays Capital now expect 2009 upstream capex worldwide to contract by 12% after several years of double]digit growth. Lower oil prices and the credit squeeze are likely to have played a greater role than a somewhat lagged reduction in project costs in driving this decrease. We will continue to track these developments in the months ahead.
It’s pretty clear when you start joining the dots that with the declining world oil reserves and the current lack of investment in the oil sector (which won’t get filled quickly as there would be a lot of investors and banks that would have got their fingers burnt during last year’s oil price drop and the credit crunch) that we are heading for another massive spike in the oil price and with some good economic news slowly starting to emerge this could be sooner rather than later.