Better Fill up today

[frawin]

Oil Falls From Seven-Month High on Signs OPEC Output Climbing




June 2 (Bloomberg) -- Crude oil retreated from a seven- month high in New York on signs OPEC's output is climbing and as traders who bet on rising prices sold futures to lock in gains.

Oil fell for the first time in seven days after the Organization of Petroleum Exporting Countries raised production by 1.5 percent in May, according to a Bloomberg News survey. The U.S. Energy Department will publish its weekly supply report tomorrow. Crude jumped as much as 3.6 percent yesterday after the U.S. and China reported increases in manufacturing activity.

"The market has hit resistance after getting well ahead of fundamentals," said Andrey Kryuchenkov, an analyst at VTB Capital in London. "OPEC compliance is a concern. For now we expect the rally to slow down before the next set of U.S. inventory data."

Crude oil for July delivery fell as much as 99 cents, or 1.4 percent, to $67.59 a barrel on the New York Mercantile Exchange. It was at $67.85 a barrel at 10:57 a.m. London time. Yesterday, oil closed at $68.58 a barrel, the highest settlement since Nov. 4. Prices are up 52 percent this year.

Futures climbed yesterday on expectation that fuel demand will increase as the economy improves later this year. The Institute for Supply Management's U.S. factory index rose to 42.8 from 40.1 in April and China's Purchasing Manager's Index showed manufacturing in May gained for a third month.

The global oversupply of crude oil will clear by the end of the year as an economic recovery spurs demand, said OPEC Director of Energy Research Hasan Qabazard.

Excess Oil

There are more than 200 million barrels of excess oil in the market in addition to 130 million barrels held on tankers at sea, Qabazard said today at a conference in Abu Dhabi. This "overhang" of oil is above the five-year average, he said.

Economists expected the ISM's U.S. manufacturing index to climb to 42.3, according to the median of responses in a Bloomberg News survey. Readings of less than 50 on the Tempe, Arizona-based group's gauge, signal a contraction.

The U.S. and China are the biggest oil-consuming countries, responsible for 33 percent of global demand in 2007, according to BP Plc, which publishes its BP Annual Statistical Review of World Energy each June.

OPEC's oil production averaged 28.15 million barrels a day last month, up 405,000 barrels a day from April, according to the survey of oil companies, producers and analysts. The 11 OPEC members with quotas, all except Iraq, pumped 25.76 million barrels a day, 915,000 more than their target.

U.S. Stockpiles

U.S. crude-oil stockpiles probably dropped 1.75 million barrels in the week ended May 29 from 363.1 million the previous week, according to the median of eight estimates by analysts before an Energy Department report this week. Inventories are likely to have fallen as refiners increased operations to meet demand during the summer driving season.

Refineries probably operated at 85.5 percent of capacity last week, up 0.4 percentage point from the previous week, according to the median of responses in the survey. Plant rates climbed 3.3 percentage points in the week ended May 22, the biggest gain since October, according to the Energy Department. Operating rates increased during the last week in May in every year but one since 2000.

Brent crude for July settlement fell as much as 92 cents, or 1.4 percent, to $67.05 a barrel and was at $67.26 on London's ICE Futures Europe exchange at 10:30 a.m. London time.

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Oil Falls as Dollar Gains, Reducing Hedge Appeal of Commodities

By Grant Smith

June 3 (Bloomberg) -- Crude oil fell in New York as the dollar strengthened from a five-month low versus the euro, limiting the need for alternative investments to hedge against inflation.

A government report later today will probably show U.S. crude-oil stockpiles dropped 1.5 million barrels last week, according to a Bloomberg survey. Gasoline consumption in the U.S. rose 2.2 percent last week from a year ago as cheaper fuel encouraged more driving during the Memorial Day holiday, a MasterCard Inc. report showed.

"We're seeing the very first signs of the oversupply easing, but there's still a large overhang out there," said Andy Sommer, analyst at Elektrizitaets-Ges Laufenburg AG in Dietikon, Switzerland. "The fundamentals don't support the recent rally, it's driven by macro sentiment and dollar moves."

Crude oil for July delivery fell as much as 72 cents, or 1.1 percent, to $67.83 a barrel on the New York Mercantile Exchange. It traded for $67.92 at 12:15 p.m. London time. Futures reached $69.05 a barrel yesterday, the highest since Nov. 5. Prices are up 54 percent this year.

The dollar snapped three days of losses against the euro. The U.S. currency was at $1.4222 per euro today after falling as low as $1.4339 earlier, the weakest level since Dec. 29.

U.S. motorists bought an average 9.244 million barrels of gasoline a day in the week ended May 29, up from 9.043 million the prior year, MasterCard, the second-biggest credit-card company, said in a SpendingPulse report yesterday.

U.S. crude-oil stockpiles fell 1.5 million barrels from 363.1 million the previous week in the week ended May 29, according to the median of 15 estimates by analysts before an Energy Department report tomorrow. Inventories are likely to have fallen as refiners increased operations to meet demand during the summer driving season.

The industry-funded American Petroleum Institute said yesterday that U.S. crude oil stockpiles fell 828,000 barrels to 363.9 million last week.

"The oil price wouldn't be where it is if people didn't have a view that the international economic situation has improved somewhat," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. "The API data showed a moderate fall in supplies and that's helpful for prices."

Stockpiles of gasoline probably rose 650,000 barrels from 203.4 million the prior week, according to the survey. Supplies of distillate fuel, a category that includes diesel and heating oil, increased 900,000 barrels from 148.4 million.

Brent crude for July was at $67.88 a barrel, 29 cents lower on London's ICE Futures Europe exchange at 11:37 a.m. local time.

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Crude Oil Climbs as Goldman Forecasts Rally to $85 by Year End


By Grant Smith

June 4 (Bloomberg) -- Crude oil rose after Goldman Sachs Group Inc. said prices may reach $85 by the end of the year and extend gains in 2010 as demand recovers and supplies shrink.

The New York-based bank raised its year-end forecast from $65 a barrel and withdrew its prediction that prices will dip prior to a rally. Yesterday, crude declined after a U.S. government report showed fuel demand fell the most since January last week as rising prices and the recession hurt consumers.

"Partly today's gains are due to the higher prediction from Goldman Sachs," said Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt. "There's a lot of optimism priced in. But demand is in a very fragile position, and I expect there will be considerable correction."

Crude oil for July delivery gained as much as $1.26, or 1.9 percent, to $67.38 a barrel in electronic trading on the New York Mercantile Exchange. It traded at $67.19 as of 11:54 a.m. London time. Oil reached a seven-month high of $69.05 on June 2.

"As the financial crisis eases, an energy shortage lies ahead," Goldman analysts Jeffrey Currie in London and David Greely in New York wrote in a research report e-mailed today. The bank set a 12-month price target of $90 a barrel, up from $70, and introduced a forecast of $95 for the end of 2010.

Fuel demand in the U.S., the world's largest energy user, fell 900,000 barrels to 17.7 million barrels a day last week, the biggest drop since Jan. 9, the government report showed. Gasoline consumption slipped 518,000 barrels to 9.02 million, the biggest decline since January 2005.

Crude Inventories

Crude inventories climbed 2.9 million barrels to 366 million in the week ended May 29, according to the Energy Department. The gain occurred as imports jumped 9.9 percent and refineries increased operating rates to the highest in six months. Fuel demand fell to the lowest since May 1999.

The Energy Department report was forecast to show that crude-oil stockpiles lost 1.5 million barrels, according to the median of 15 estimates from analysts surveyed by Bloomberg News.

Refineries operated at 86.3 percent of capacity, up 1.2 percentage points from the previous week and the highest since the week ended Dec. 5, the report showed.

Brent crude for July delivery was at $67.17 a barrel, up $1.29, on London's ICE Futures Europe exchange at 11:56 a.m. local time. It dropped $2.29, or 3.4 percent, to end yesterday's session at $65.88, the biggest decline since April 20.

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Crude Oil May Fall as U.S. Fuel Demand Declines, Survey Shows

June 5 (Bloomberg) -- Crude oil futures may fall from a seven-month high on speculation U.S. stockpiles will increase as consumption tumbles.
Twenty-three of 34 analysts surveyed by Bloomberg News, or 68 percent, said futures will fall through June 12. It's the most bearish response since February 2008. Seven respondents, or 21 percent, forecast that oil prices will rise and four said the market will be little changed. Last week, 50 percent of analysts said prices would decline.
Crude-oil supplies climbed 2.9 million barrels to 366 million last week, according to an Energy Department report on June 3. The gain occurred as imports jumped 9.9 percent and refineries increased operating rates to the highest in six months. Fuel demand fell 900,000 barrels to 17.7 million barrels a day last week, the lowest since May 1999.
Prices jumped 54 percent this year as the stock market rebounded and the dollar weakened. A falling U.S. currency bolsters the appeal of commodities as an alternative investment.
"I really think you are going to see a reconsideration of this move higher," said Tim Evans, an energy analyst with Citi Futures Perspective in New York. "It's probably not wise to load up on futures at these price levels given the supply and demand picture. The flow of buying may soon be exhausted."
Crude oil for July delivery rose $2.50, or 3.8 percent, to $68.81 a barrel so far this week on the New York Mercantile Exchange. Yesterday's settlement was the highest since Nov. 4. Prices have dropped 53 percent from the record $147.27 a barrel reached on July 11.
The oil survey has correctly predicted the direction of futures 47 percent of the time since its start in April 2004.

[srkruzich]

its getting rediculous that price of gas is rising overnight again now at 2.50 a gallon when consumption declines.  Their trying to squeeze blood out of us when were dry as a bone.

ALl this "conservation" bru haha that they have been ranting about all these years makes no difference, all it does is raise the prices.

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Oil Follows Equities Lower as Stronger Dollar Limits Hedging




June 8 (Bloomberg) -- Crude oil fell for a second day, tracking a decline in European and Asian equity markets, while a stronger dollar reduced the investment appeal of commodities.

Oil declined as the U.S. currency strengthened against the euro for a second day to its highest in more than a week. The stronger currency undermines demand for dollar-priced assets such as oil used to hedge against inflation. The relative strength index for crude rose to 67.41 today from 51.12 at the end of April, indicating prices may be poised to fall.

"The rally has stalled after Brent failed to break $70 a barrel," said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. "While the worst is behind us economically, we shouldn't be too optimistic as the demand recovery will take some time."

Crude oil for July delivery fell as much as $1.66, or 2.4 percent, to $66.78 a barrel on the New York Mercantile Exchange. It was at $67.44 at 11:41 a.m. in London. Oil jumped 38 percent in the past two months and 51 percent this year as rising equity markets lifted investor confidence and the falling U.S. dollar boosted interest in oil, metals and other commodities.

Oil futures touched a seven-month high of $70.32 on June 5 after the Labor Department's May report showed the fewest job losses in eight months. Crude is poised for a "spike" amid a lack of new investments, Jeroen van der Veer, chief executive officer of Royal Dutch Shell Plc, said today.

Readings above 70 on the relative strength index, which show how rapidly prices have advanced or dropped during a specified time period, indicate prices may be poised to fall. Readings below 30 indicate it may be poised to rise.

The dollar strengthened to $1.3874 per euro as of 9:50 a.m. in London from $1.3968 in New York at the end of last week.

'Significant Implications'

"The dollar's rally has pretty significant implications or consequences for the commodity sector overall," said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. Inventories remain high, and "it's not surprising to see oil off a little today," he said.

Stocks fell in Europe and Asia amid speculation that share prices have outpaced the prospects for earnings growth after a three-month rally. Europe's Dow Jones Stoxx 600 Index slipped 1.2 percent at 11:20 a.m. in London. U.S. futures slid.

Brent crude for July delivery declined as much as $1.46, or 2.1 percent, to $66.88 a barrel on London's ICE Futures Europe exchange and was at $67.40 at 11:41 a.m. local time.

Kirkuk Output

Oil was also hurt by increasing output, adding to stockpiles. Daily production from the Kirkuk region of Iraq, OPEC's third-largest producer, climbed 16 percent to 670,000 barrels on new wells and improved security, news agency Aswat al-Iraq reported yesterday.

Crude oil prices may average $65 a barrel by the end of 2009 as the global economy begins to rebound, according to Lawrence Eagles, global head of commodities research at JPMorgan Chase & Co.

Based on a study of consumption patterns over the past 15 years, demand could climb as much as 3 million barrels a day through December under the best-case scenario, Eagles told reporters at the Asia Oil and Gas Conference in Kuala Lumpur today.

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Natural Gas Cheapest to Oil Since 1992 Signals Gain (Update1)

By Margot Habiby

June 8 (Bloomberg) -- This year's 31 percent decline in natural gas made it the worst performing commodity and the cheapest next to oil since the fall of the Soviet Union. That's about to change, if history is any guide.

Natural gas lost 72 percent in 11 months as the U.S. fell into the deepest recession in 50 years and drillers failed to idle rigs fast enough to control inventories. Stockpiles are 22 percent larger than the five-year average, the Energy Department said. Oil costs 18 times more than gas, the biggest gap since 1992, when the collapse of communism cut supplies from Russia, according to data compiled by Bloomberg.

Now, gas drillers are tightening their grip on production just as the economy shows signs of improving. The number of U.S. rigs plunged 56 percent in nine months, the steepest drop in two decades, Baker Hughes Inc. said. Gas may rise 38 percent in the second half, while oil will gain 22 percent, according to Bloomberg analyst surveys.

"The scope for gas to rally before the end of the year is bigger than for oil," said Ben P. Dell, an energy analyst with Bernstein Research in New York. "The gas market is playing out as expected. Supplies are getting drastically reduced because of falling rig counts, and demand is showing some signs of stabilization."

Gas for July delivery was trading at $3.858 per million British thermal units, down 0.3 percent, on the New York Mercantile Exchange at 12:24 p.m. in Singapore. It closed at $3.868 on June 5, its 31 percent drop this year the most in the 24-member S&P GSCI Commodity Index.

Oil vs. Gas

Futures may rise this week, a Bloomberg News survey of 16 analysts showed. Oil cost 8.4 times more than gas on average during the past decade, according to data compiled by Bloomberg.

Prices are likely to climb to an average $6.50 per million Btu in the fourth quarter from an average $3.90 in the second, Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt, forecast last month. The price has averaged $3.766 so far this quarter and is up 10 percent in two weeks.

The number of U.S. gas rigs declined to 700 last week, the lowest since 2002, according to Houston-based Baker Hughes, the world's third-largest oilfield-services supplier.

OPEC's decision to cut production by 3.46 million barrels a day, or about 12 percent, helped crude rally 54 percent this year, to $68.44 a barrel on June 5 in New York.

The Organization of Petroleum Exporting Countries pumped close to capacity as the economy expanded and crude almost tripled between January 2007 and July 2008 to a record $147.27 on July 11. Natural gas followed, more than doubling to a 2008 high of $13.694 per million Btu on July 2.

Collapsing Demand

As the economy slowed, demand from factories and power plants, the users of 58 percent of all natural gas, declined. By April, prices touched a six-year low of $3.155.

"Fundamentals are holding gas down, and crude oil is trading less on fundamentals and more on consumer sentiment and perception," said Steven Schork, president of Schork Group Inc. of Villanova, Pennsylvania, an energy-trading consultant. "We have a disconnect between the two, and there is no expectation in the near term to see these two re-link."

Dell at Bernstein Research said gas needs to reach $7.50 to spur enough production to meet demand, known in the industry as the marginal cost of supply. He forecasts gas will more than double to $9 to $10 by the end of the year, while oil will rise to $70 or $80 a barrel from $68.44 as of June 5.

If he proves right, a speculator who bought 10 gas contracts and sold an equal number of crude futures would earn a return of about 46 percent.

Price Ratios

Dell's fourth-quarter gas price would lower the ratio to about 8-to-1. The median estimate of analysts in the Bloomberg survey for $5.50 represents 11-to-1, based on the fourth-quarter forecasts at $61 a barrel.

Oil reached 18.1 times the price of gas on June 4, the highest since January 1992. The ratio fell to 8-to-1 by September that year as Hurricane Andrew halted daily output of 13 billion cubic feet of gas and the economy recovered from a recession.

Bill O'Grady, the chief markets strategist at St. Louis- based Confluence Investment Management LLC, an investment advisory and management firm, said the ratio may reach 20 to 1 or greater as natural gas inventories increase as do risks to oil supplies. Oil production in Nigeria, Africa's biggest producer, fell to less than half the country's capacity last month as fighting escalated in the Niger River delta.

"We have made tremendous strides in improving" the gas supply situation, he said. "When the technology improved to the point where you can capture shale gas, we found out we've got all kinds of supply here in the Lower 48."

Gas Shales

Gas producers started tapping so-called shale gas formations after technology to exploit the reserves was perfected in the 1990s. Gas in shale deposits is locked into nonporous rocks. Gas found in more traditional locations is often under enough pressure to rise to the surface on its own.

While home resale data and forecasts for a strengthening gross domestic product show the economy is stabilizing from the recession that started in December 2007, it's premature to say the contraction is over, according to the National Bureau of Economic Research, which calls the nation's financial cycles.

Gross domestic product estimated on a monthly basis "had a trough earlier this year, but it is way too early to say that it is a true trough rather than a pause in a longer decline," said Robert Hall, who heads the NBER's Business Cycle Dating Committee.

Economists expect the economy to grow 0.5 percent in the next quarter and then expand further, according to 61 responses to a Bloomberg News survey.

Houston-based ConocoPhillips, the third-largest U.S. oil company, expects natural gas will rise to $6 to $8 as early as next year as demand recovers, said John Wright, president for gas and power marketing.

"I don't think the levels that we're at now will provide the supply needed to meet demand, and that says prices will go up from here," he said in a June 4 interview in Houston.

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Oil Rises for the First Time in Three Days on Demand Optimism

By Grant Smith

June 9 (Bloomberg) -- Crude oil rose for the first time in three days on growing optimism that the world economy is emerging from recession and fuel demand is set to recover.

The U.S. Energy Department will probably say in a report tomorrow that refiners boosted operating rates to meet summer consumption, according to a Bloomberg survey. Chinese vehicle sales surged 34 percent last month, reinforcing speculation that the global recession is ending.

"Lately both the oil price and the dollar have been signaling that the recovery is around the corner," said Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt. "European equity markets trading in positive territory, a weaker dollar and the upbeat economic outlook are keeping us near the $70 target."

Crude oil for July delivery gained as much as $1.28, or 1.9 percent, to $69.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $68.70 at 10:44 a.m. in London. Prices have gained 55 percent this year and touched a seven-month high of $70.32 on June 5.

Europe's Dow Jones Stoxx 600 Index of equities added 0.6 percent at 10:30 a.m. in London. The dollar fell against the euro, spurring demand for commodities priced in the U.S. currency that can be used to hedge against inflation.

The dollar fell in the past three months against all of the 16 most-traded currencies tracked by Bloomberg except the yen on speculation the Fed's purchase of up to $300 billion in Treasuries to support the economy will undermine currency. The dollar traded at $1.3907 per euro as of 10:29 a.m. in London.

'Behind the Wheel'

"Depending on which way the dollar moves, we'll find out if the bulls are still behind the wheel or if they've finally been thrown under them," Stephen Schork of the Pennsylvania- based Schork Group Inc. said in a report today.

Chinese drivers bought 1.12 million vehicles last month, the China Association of Automobile Manufacturers said in a statement today, extending the country's lead over the U.S. as the world's largest auto market this year.

The Energy Department is scheduled to release its weekly report tomorrow at 10:30 a.m. in Washington.

Gasoline supplies probably rose 1.15 million barrels in the week ended June 5 from 203.2 million the previous week, the survey showed. Stockpiles of distillate fuel, a category that includes heating oil and diesel, probably increased 1.05 million barrels from 150 million.

Analysts were split over whether crude-oil stockpiles rose or declined last week. Supplies were probably unchanged at 366 million barrels, according to the median of eight respondents in a Bloomberg News survey. Four analysts forecast a decline and four said there was an increase.

"Demand remains quite weak," Commerzbank's Weinberg added. "We remain skeptical on the prospects of oil trading already so high in this early stage of a possible economic recovery."

Brent crude for July delivery rose as much as $1.29, or 1.9 percent, to $69.17 a barrel on London's ICE Futures Europe exchange. It was at $68.74 at 10:21 a.m. London time. Futures touched $69.91 on June 5, the highest since Oct. 21.


Last Updated: June 9, 2009 05:46 ED

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Crude Oil Rises Over $71 on API Stockpile Drop, Weaker Dollar

By Grant Smith

June 10 (Bloomberg) -- Crude oil rose to a seven-month high after an industry group reported U.S. stockpiles dropped and the dollar weakened against the euro, bolstering the appeal of energy as an alternative investment.

Crude climbed past $71 a barrel on expectations the dollar may extend its decline as investors turn from treasuries to other asset classes including commodities. Yesterday, the American Petroleum Institute said crude oil supplies fell 5.96 million barrels to 357.9 million last week, the lowest since March. The Department of Energy will report their data today.

"Sentiment for oil is buoyant," said Andrey Kryuchenkov, an analyst with VTB Capital in London. "Investors are seeing more green shoots as macro data gradually improves, and with the weaker dollar stoking long-term concerns about inflation they're opting for commodities."

Crude oil for July delivery rose as much as $1.64, or 2.3 percent, to $71.65 a barrel in electronic trading on the New York Mercantile Exchange, the highest since Nov. 4. It was at $71.06 a barrel at 11:24 a.m. London time.

Oil peaked at $147.27 a barrel on July 11 before slumping to $32.40 on Dec. 19 as the global recession curbed energy use.

The Organization of Petroleum Exporting Countries will only consider increasing output when the price of crude rises to $100 a barrel, according to Kuwaiti Oil Minister Sheikh Ahmed al- Abdullah al-Sabah. OPEC, supplier of 40 percent of the world's oil, is next due to meet on Sept. 9.

Dollar Weakness

The euro may gain for a second day today after Goldman Sachs Group Inc. recommended clients buy the currency. The dollar traded 0.3 percent lower at $1.4027 against the euro at 11:24 a.m. in London.

"The oil market is rallying due to weakness in the dollar and more liquidity in the marketplace," said Mike Sander, an investment adviser at Sander Capital Advisors Inc. in Seattle. "There is clearly more money moving into the commodities markets with the sharp rises in agriculture, softs, metals, and energy."

The U.S. Energy Department will probably report today that refiners boosted operating rates to meet summer gasoline demand, according to a Bloomberg News survey.

Refineries probably operated at 86.5 percent of capacity in the week ended June 5, up 0.2 percentage point from the previous week, according to the median of 13 analyst responses.

"There are signs that the refineries are starting to tweak up capacity and that means stronger demand for gasoline," said Mark Pervan, a senior commodity strategist at Australia and New Zealand Banking Group Ltd. in Melbourne, in a Bloomberg Television interview. "You're seeing a very preemptive market that is buying on any sort of positive news."

'Killing Zone'

Gasoline supplies probably increased 750,000 barrels, the first gain in seven weeks, according to the survey. Stockpiles of distillate fuel, a category that includes heating oil and diesel, probably climbed 1.5 million barrels.

"It's really a killing zone on fundamentals for oil." Johannes Benigni, chief executive officer of JBC Energy GmbH in Vienna, said in a Bloomberg Television interview. "On the gasoline front demand is not picking up. Refinery margins are horrifying. In July, we would see potential to go close to $50 or even slightly below $50."

Analysts surveyed by Bloomberg News were split over whether crude-oil stockpiles rose or declined last week. The Energy Department is scheduled to release its weekly report at 10:30 a.m. in Washington.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Oil-supply totals from the API and DOE moved in the same direction 76 percent of the time over the past four years, according to data compiled by Bloomberg.

Brent crude for July delivery rose as much as $1.38, or 2 percent, to $71 a barrel on London's ICE Futures Europe exchange, the highest since Nov. 5. It was at $70.57 at 11:23 a.m. London time. The contract rose yesterday $1.74, or 2.6 percent, to end the session at $69.62 a barrel.



Last Updated: June 10, 2009 07:00 EDT

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World Oil Reserves Fell for First Time in 10 Years, BP Says

By Rachel Graham and Alexander Kwiatkowski

June 10 (Bloomberg) -- Global proved oil reserves fell last year, the first drop since 1998, led by declines in Russia, Norway and China, according to BP Plc.

Oil reserves totaled 1.258 trillion barrels at the end of 2008, compared with a revised 1.261 trillion barrels a year earlier, BP said in its annual Statistical Review of World Energy posted on its Web Site today. The world has enough reserves for 42 years at current production rates, BP said.

BP and other oil companies are struggling to replace reserves as access to deposits becomes harder and older fields in places like the U.K. and Mexico are depleted. Russia passed a law last year that limits foreign ownership in some of the country's biggest energy and metals deposits. Middle East countries, which hold 60 percent of global reserves, restrict access for international companies.

"Our data confirms the world has enough reserves of oil, natural gas and coal to meet the world's needs for decades to come," BP Chief Executive Officer Tony Hayward said in his introduction to the report. "The Challenges the world faces in growing supplies to meet future demand are not below ground, they are above ground. They are human, not geological."

Saudi Arabia's reserves, the world's largest, stood at 264.1 billion barrels, little changed from 264.2 billion a year earlier, BP said. The Middle East as a whole holds 754.1 billion barrels, compared with 755 billion barrels last year.

"Declines in Russia, Norway, China and other countries offset increases in Vietnam, India and Egypt," BP said on its Web site.

Canadian Oil Sands

Including Canadian oil sands deposits of 150.7 billion barrels, total global reserves stood at 1.409 trillion barrels, the review said.

BP made an upward revision to 2007's global oil reserves of 23.1 billion barrels, with the largest increases in OPEC members Venezuela and Angola.

None of the biggest international oil companies have replaced output through new discoveries or extending fields in the past six years, Sanford C. Bernstein & Co. said in an April 2 report. Companies such as Royal Dutch Shell Plc, Europe's largest oil company by market capitalization, are looking at acquisitions to boost reserves, Bernstein said.

BP said the estimates in today's report are a combination of official sources, OPEC data and other third-party estimates. Oil reserves include gas condensates and natural gas liquids, as well as crude oil.



Last Updated: June 10, 2009 04:06 EDT