Gameboy, about your "corrections" to the IEA article:
Greg, the article needs a lot of correction:
1) "Incremental world oil demand this year is set to slip to 900,000 bpd marking a slump from two million barrels daily of growth in 1997."
"Slump" sounds bad - but we're not contracting, according to the EIA (our own US Dept of Energy, Energy Information Administration) consumption demand for oil will grow by 1.2 million barrels/day more in 1998 than 1997 (compared to the forecast of 1.5 million barrels/day before the Asian Crisis).
When two sources of information differ, it is not sufficient to just state that the one you prefer is "correct". How recent is the U.S. EIA data? Can you provide a link on this and state your reasons why you think they are correct and the IEA is incorrect?
2) "The Organisation of the Petroleum Exporting Countries led a reduction of world supplies in July of some 500,000 bpd to 75.16 million."
Way off - according to EIA, the July 1st cutbacks totaled 1,595 million barrels/day.
The problem is that OPEC has not met its announced cutback goals. For example, Venezuela has officially announced they will not complete their cutbacks until sometime in August. Look at today's Wall Street Journal:
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OPEC Reduces Its Production, But Not to Levels Pledged in June
An INTERACTIVE JOURNAL News Roundup
August 7, 1998
LONDON -- OPEC managed to reduce its oil output in July, but not nearly as much as members of the oil cartel had pledged the month before.
The Paris-based International Energy Agency Friday issued estimates putting production by members of the Organization of Petroleum Exporting Countries, excluding Iraq, at 25.53 million barrels a day.
The July output was more than 1 million barrels over the production rate set at an OPEC meeting in June, when members agreed to reductions totaling 2.6 million barrels a day.
The IEA also revised down forecasts for world oil demand in the third and fourth quarters of 1998 by 300,000 barrels a day and 200,000 barrels a day respectively.
OPEC's efforts to pump up the price of oil face a host of difficulties, not the least of which is slumping demand because of reduced economic activity in Asia.
OPEC's June production agreement was the group's second round of cuts this year. Prior to this year's oil glut, OPEC as a group hadn't cut production in about a decade.
Indeed, the glut has led Saudi Arabia, the biggest oil producer, and others to consider forming a new alliance of petroleum-exporting nations. A new group probably would exclude OPEC troublemakers and embrace outsiders in a more informal -- and more secretive -- group that would seek to prop up oil prices in the same way that central banks shore up currencies. The power of this group would lie in its huge combined reserves, its freedom from the cumbersome 11-member OPEC, and its ability to take the markets by surprise.
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3) But, said the IEA, even assuming further supply cuts the world's hoard of oil is likely to grow even further in July and August.
Wrong. The total world price of oil has climbed weekly in July from $11.00, to $11.17, to $11.30, to $11.49, and finally to $11.90 week ending July 31st largely the effects of the supply cuts.
IEA says oil stocks are likely to grow and you said "Wrong". Can you provide any evidence to support this? Your comment about the slight rise in crude prices does not directly support your contention about the issue of growing stocks, but it is important. Can you provide a link where these prices are posted?
IEA is not to be confused with EIA. IEA (whoever they are) is drawing incorrect conclusions and is inaccurate with the facts.
IEA is the Paris-based International Energy Agency. The WSJ seems to take them seriously.
I am open to arguments either way on these issues. What I do not understand is your dismissive tone toward negative information regarding this sector. Why should anyone reading this thread believe your attempts to put a positive spin on the serious problems facing the oil industry? Especially in light of what the stock market is saying about anything oil-related?
-Greg
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