A string of impressive discoveries from America to West Africa have prompted optimism that a widely-touted supply crunch may not be as imminent as industry watchers have suggested.
Some executives say that the drop in demand and the overhang in capacity will delay an oil crunch for some time to come.
Ian Taylor, head of energy trader Vitol, notes that tanker rates are still below marginal cost, US refineries are running at little more than 80 per cent capacity and distillates are being stored in tankers around the world because no one wants to buy them: “We think there has been over-investment in the supply chain,” he says. “Even with strong [economic] growth, oil demand will not absorb the capacity for several years.”
Others take a different view, believing China’s oil demand will bounce back and uncertainty in volatile countries such as Venezuela and Nigeria could quickly drive up prices.
“It does not take a lot to take 2m barrels a day off the market,” counters Albert Helmig, president of the Hong Kong Mercantile Exchange.
Christophe de Margerie, chief executive of Total, this month challenged industry executives to stand up and disprove his theory that the world would never be able to produce more than 100m b/d – about 20 per cent more than present production rates – because much of the remaining oil lies in countries either unable or unwilling to tap it.
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A string of impressive discoveries from America to West Africa have prompted optimism that a widely-touted supply crunch may not be as imminent as industry watchers have suggested.
