Oil Maybe Flat Next Year - 11/24/08

After China’s $586 Billion stimulus package, Mr. Market pushed oil prices down to $65 a barrel and as of the writing of this article it is $56 a barrel.  All the news about future oil production cuts could not be over heard by all the bad news about the global economy. 

The weekly US oil stocks report shows US gas consumption continues to recover from the $4 a gallon price we saw last summer.  The US average gas price is now $2.10 and there have been prices as low as $1.50.

The EIA and IEA have cut their forecast for oil demand for this year and next year.  Both predict oil consumption flat through 2009.  This is a change from their forecasts of an annual increase of 1 million barrels per day.  The EIA is forecasting for 2009 that global demand growth will be much less than the growth in non-OPEC supply, with projects that are about to be finished go into production.

The IEA reports global oil supply increased by 1.8 million barrels per day in October to 86.9 million barrels per day.  October data shows a steep rise of 51.2 million barrels in OECD inventory.  The OPEC production cut of 1.5 million barrels per day is not scheduled to start till November and it will take two months to implement.

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