A new study be Cambridge Energy Research Associates shows that new oil field discoveries could offset slowing production from older fields. According to The Wall Street Journal "This study supports a view that there is no impending short-term peak in global oil production."
If the supply coming online is coupled with modest demand due to a slowing global economy, the data may be accurate.
What the figures do not take into account is the unpredictability of the Chinese willingness to underwrite the cost of crude. The central government is still buying oil and, after refining, selling it at extremely low prices in the form of low gas and diesel pricing. This, is turn, is keeping demand robust and growing in the China consumer and industrial sectors.
Oil consumption numbers are based on rational market behavior. China may become the largest consumer of oil by the end of the decade. And, its purchasing of crude in not based on normal market forces.
Douglas A. McIntyre
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