Oil price and world production

World production and consumption of crude oil

Production and consumption of gas in USA

prisutveckling

(Billion Cubic Feet)

Gas production in USA, 2013 24334
Gas consumption in USA, 2013 26168

Oil price

Because of recent events on the stock market in China decreased the oil price (WTI) to about USD 40 per barrel. However, wrote the EIA (The US Energy Information Administration) days prior to the recent fall in prices reflects expectations of higher oil exports from Iran, remained actual and expected growth in global oil stocks, and concerns about slower economic growth in emerging markets. In the longer term, however, the EIA expects oil prices will recover and advocates an average price of about USD 55 per barrel for 2016, which it is expected to continue upward. That oil is trading at a very low price now are all aware, while there is consensus that a significantly higher oil prices is to be expected, the question is when.

Oil production has always been consumption-driven and between 1980-2013 increased world oil consumption from approximately 63 to 91 million barrels of oil per day. In the current recession prevailing in much of the world is currently an overproduction of about 500,000 barrels of oil per day (about 0.5%). Meanwhile, the actual daily production in the US decline in existing fields by more than 10% per year (current production is reduced by about 1.2 million barrels of oil per year), while in the rest of the world can expect a reduction of daily production in existing oil fields at about 3 , 5% per year (current production is reduced by about 2.5 million barrels of oil per year). At the European level, turn the oil consumption by about 14% (2 million barrels of oil per day) between high and recession.

Moreover, we look at the growth areas of India and China as oil consumption has increased exponentially between 1980-2013 from nearly 2.5 million barrels up to 14 million barrels per day. Consumption in the West is about 0.05 barrels of oil per day per capita, while consumption in China and India is around 0,005 barrels. This means that China and India should have the oil needs of around 140 million barrels per day when they achieve the same standard of living as in the West. As for Africa, oil consumption increased from about 1.5 to 3.6 million barrels per day between 1980 to 2013. The African continent is expected to be the next growth area which can provide the same consumption trend in Africa as in other parts of the world. This should be weighed against a temporary oversupply of about 0.5 million barrels of oil per day and a possible increase in production in Iran of approximately 0.5 million barrels per day. Therefore, we advocate in the near future the oil price is on par with last summer’s prices, and that we can expect oil prices within a 5 year period is even higher. One positive effect of the low oil price is that it helps to kick start the world economy, which in turn demands a higher oil price. Since the company’s production cost is between 3-5 USD per barrel affect the current price decline is only the company’s revenue in the short term. As some of our wells further estimated to produce between 15-20 years, it is important to see what the price of oil is expected to be during this period than focusing on today’s lower oil prices.

Crude oil – Producers and consumers

10 largest producers 2013

10 largest consumers 2013

10

(Millon Barrels Per Day)

Price development for natural gas and crude oil 1990-2015

Natural gas

pris-naturgas

Crude oil

pris-raolja