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Peak oil, prices, and supplies - Sept 18

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Supply constraints to push oil up to $105 a barrel by 2012

Karen Remo-Listana, Emirates Business 24/7
Oil prices will rebound to $105 per barrel by 2012 due to the upcoming tightening of supply, a new study has found.

According to a Morgan Stanley report, most of the scheduled incremental oil capacity from 2009 to 2015 is highly ambitious and unlikely to be achieved due to technical, financial and political setbacks.

This will result in tight spare capacity, one of the major reasons for price increases in 2005 until oil prices peaked last year.

Energy economists believe price rises in the past years revealed an oil market that has lost a great deal of its flexibility and capacity to deal with supply disruptions or large unexpected increases in global demand.

Spare capacity – or extra crude oil stored for emergency cases – is said to have helped offset large demand and supply shocks in the 1980s and 1990s. But this has dipped to record lows in recent years...
(16 Sept 2009)

Peak oil expected in 2009: Macquarie

David Sheppard, Reuters via the Globe and Mail
Peak oil supply will be hit this year after the economic crisis and low prices in the first quarter of 2009 slashed much needed investment, a senior executive at Australian investment bank Macquarie said.

“This is our view – capacity has pretty much peaked in the sense that declines equal new resources,” Iain Reid, head of European oil and gas research at Macquarie, told Reuters.

The peak oil theory that oil supply is at or near its peak was long considered marginal.

It gained currency when prices (CL-FT72.07-0.40-0.55%) zoomed towards their record of nearly $150 (U.S.) hit in July last year, with leading exponents suggesting various dates for the supply peak to be reached.

Some oil majors have acknowledged the prospect of dwindling production, but others have argued better extraction techniques and other technological advances will offset any decline...
(16 Sept 2009)

Oil strikes not enough to quench demand

Carola Hoyos, Financial Times
A flurry of big oil discoveries from Brazil to Sierra Leone undermines those who believe that there are no new oil frontiers to explore but the finds may not be enough to ward off a supply crunch as the world economy recovers.

...Are these new discoveries big enough to delay or even avoid the supply crunch that oil executives, leaders of the Group of Eight rich countries and Opec, the oil cartel, all warn could befall the world as it attempts to recover from its worst recession in decades?

In the near-term, the answer is probably not. This is because fields take a long time to develop and some forecasters see a crunch happening before 2014. David Fyfe, who heads mid-term supply forecasting at the International Energy Agency, the rich countries’ watchdog, said the speed of the economic recovery would be a major factor. If the economy returns to 4.5-5 per cent growth rates, the world will need about 4m barrels of oil a day more output to meet demand if it does not want to risk a price spike, such as the one that happened in the summer of 2008.
(17 Sept 2009)

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