Friday, June 10, 2011

2010 Oil Story: Drawing Down the Inventories

Gregor Macdonald submits:

Hat tip to the Economist Magazine for catching a key, energy data point from this week?s BP Statistical Review: in 2010, the world consumed about 5 mbpd (million barrels per day) more oil than it produced. Anticipating the discrepancy between the two figures, the BP Statistical Review authors write on page 9 of their PDF:

Differences between these world consumption figures and world production statistics are accounted for by stock changes, consumption of non-petroleum additives and substitute fuels, and unavoidable disparities in the definition, measurement or conversion of oil supply and demand data.

I agree with the Economist Magazine?s conclusion that most of the difference between 82.095 mbpd produced and 87.382 mbpd consumed came from stock changes. In other words: the drawing down of oil from inventories. Indeed, this was a key driver for oil?s advance last year from the high $70?s to over $90 a barrel. In the chart

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