See Is Oil in a Price Bubble?, and Plateau continues, aided by outages.

Dear Stuart,

At the ASPO-5 meeting there was a presentation by Andrew McKillop, in which he advanced the notion that the supply and demand numbers have been doctored. Mr Luca Barillo, an oil trader, concurred, during his presentation, as did one mutual fund manager in the audience with whom I took up this issue privately.

The claim is that increase of over 4 million barrels per day during 2003-2004 is the result of readjustment of the numbers, as the original numbers at the time did not reflect this large of an increase. Thus if the 2004 and 2005 numbers have been increased after the fact, then the increase during the latter part of 2005 and the first half of 2006 would appear slower than what is actually happening.

McKillop estimates that the increase in demand is around 2.4%or about 2 Mb/d, rather than the 1.3-1.7 percent traditionally assumed. Where does this extra come from? I talked with McKillop and our guess is that it comes from condensate and natural gas liquids, owing to the many natural gas projects which have been started.

From all we read in the papers, it certainly does not seem that demand slowed down over the last 12 months.

best, Seppo Korpela

P.S. My first post to Oil Drum

According to IEA figures, world supply is exceeding world demand. For the last quarter, 1.8 million barrels per day should have been going into stocks. We only have OECD stock figures from the IEA so does anyone know if world stocks have risen by 164 million barrels, since the first quarter?

Looking back, supply exceeded demand by 18 million barrels, during the first quarter, so stocks should have risen by that much. OECD stocks rose by 13 million barrels. In fact, supply has exceeded demand for every quarter in table 1, except the 1st quarter of 2005, even in the hurricane hit 3rd and 4th quarters. In 2005 overall, supply exceeded demand by 0.8 mbpd. So stocks should have risen by 292 million barrels. OECD stocks were only 79 million barrels higher at the end of that period.

It doesn't give me much confidence that these figures have any validity. With supply exceeding demand comfortably in the last quarter, prices should have fallen, possibly even with geopolitical factors. Indeed, given the oversupply for over a year, shouldn't prices be way down on their highs?