CRUDE OIL UPDATE: Tighter Oil Supply in 2012?

Tighter Oil Supply in 2012? By STEVE AUSTIN for OIL-PRICE.NET, 2011/08/01

Predictions for thefuture? Here's one based on the available pointers: Tighter oil supplies in2012. In fact, brace yourself, a potential demand surge could, in essence,bring this faraway calculation of next year, nearer by three months. And withit higher price for oil. Last month, the IEA announced release of strategic oilreserves to the market through August. Historically, such a measure is takenduring desperate times like war. Well, goes to show how tight supply really is.

Goldman Sachs GroupInc. has, in a recent report, said that oil supplies would become"critically tight" in 2012. Analysts of the bank predict that oilprices could go even higher as spare production capacity and inventories are"effectively exhausted." So, why not increase production, from say,Saudi Arabia? Well, Goldman has also shared apprehension on the ability ofSaudi Arabia to raise oil production in the face of eventual scarcity as itbelieves that Saudi Arabia won't be able to pump as much extra oil as manypeople believe. On a scary note, the scarcity could occur as early as laterthis year.

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