1. The World Oil Market in 2006 tutor2u www.tutor2u.net

2. The world oil market in 2006 A year of price volatility Oil prices peaked at almost $80 a barrel Brent crude ended the year at $60 a barrel Prices are still at historically high levels Slowdown in world economy including the USA will impact on global demand Oil production has increased – but OPEC is looking to make production cuts to put a floor on the world price

3. Price of Brent Crude in 2006

4. Futures prices have also dipped

5. Global oil consumption has risen

6. Driven by China

7. And other BRICs

8. But Brazil is also raising output

9. Gas guzzlers in America!

10. OPEC has stabilised production

11. Saudi Arabia has squeezed supply

12. October 2006 – OPEC announces a cut in oil production “OPEC Member Countries have decided to reduce their crude oil production in a bid to bring global oil supply more in line with actual demand. OPEC has agreed to cut output from the Organization, excluding Iraq, by 1.2 million barrels/day, effective November 1 st 2006 OPEC is concerned that global crude oil supplies were well in excess of demand, as the above average level of crude oil stocks in OECD countries demonstrated. They observed that the oversupply situation and imbalance in supply and demand fundamentals had destabilized the market.” Source: OPEC Observer

13. World crude oil stock levels

14. OPEC is now looking for quota cuts

15. But OPEC output is below capacity

16. OPEC’s share of world production

17. OPEC OPEC is a permanent, intergovernmental Organization, established in 1960 Its objective is to coordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry. The Organization now comprises 11 Members

18. High oil prices – little impact on world inflation – yet!

19. Suggestions for more research OPEC International Energy AgencyInternational Energy Agency BBC news –Oil prices rise on Opec cut news (Dec 2006)Oil prices rise on Opec cut news –Oil up as Opec plans output cut (Oct 2006)Oil up as Opec plans output cut –Oil markets explained (March 2003)Oil markets explained Guardian special reports on oilGuardian special reports on oil