oil stocks to explode.........., page-13

The Oil Story is not so much one of "Supply and Demand" it’s more a story of "Demand and Deliverability".

While there is supposedly spare production capacity of 2 - 3 mmbbls/day in the world it’s fundamentally for the hard to process end of the oil spectrum. Added to that, there is not much spare capacity for the heavy hard to process oil at the refineries.

Build more capacity for the heavy stuff .......... who is going to do that in the next little while or in time to halt the rise in the price?

The other thing to think about is that nearly all oil fields are subject to an approx 5% - 8% per annum decline in their field performance. So you can find the oil and bring it into production and then bring some more into production just to stay at the same level of production.

There is only so much that can be done in a day, month or year to prop up, maintain or try to increase production.

The short term solution to demand exceeding supply will be to supply that demand from the world’s available oil inventories.

The best way to see if we are really running short on the true supply side, will be to keep an eye on the change in the balance of world inventories. Just as you can look at the change in wheat; corn; rice etc etc

Every day the picture is becoming clearer.

MI