http://www.riskcenter.com/story.php?id=8663
May 18: Energy Risk - Oil Prices Reach Record Levels And Fears Grow That Supply Will Not Meet Demand in China --------------------------------------- Location: New York Author: Ellen J. Silverman Date: Tuesday, May 18, 2004 --------------------------------------- Yesterday, the cost of benchmark crude oil rose $0.66 to close at $40.77 a barrel, the highest price in more than two decades of trading on the New York Mercantile Exchange. Oil prices have risen about $8 a barrel, or 24%, on concerns that oil demand will outpace supply due to fears of attacks on the Middle East as well as the fact that oil dealers are skeptical OPEC has enough spare production capacity to bring prices down. Because of this, analysts are wary that supply will keep up with China 's explosive oil consumption. China 's demand for oil is projected to increase 21% this quarter, according to the International Energy Agency. The growth in Chinese consumption accounts for roughly half the 2 million barrels a day increase in worldwide demand expected this year. The increase in Chinese demand is being driven by the rapid introduction of automobiles and other forms of transportation. China was largely self-sufficient in oil until 1993 but now must now import about one-third of its supply to meet demand. China consumes just 30% of the petroleum used in the United States ; however, the growth in China 's consumption is roughly four times as large. According to a recent Reuters article, China is expected to use 930,000 barrels a day more than in the year-ago period, versus an increase of about 230,000 barrels a day in the United States . The lack of conservation efforts by the United States remains a prime cause of worldwide oil market pressures. Speculation is also playing a role in driving up costs. A decline in U.S. gasoline supplies has reinforced concerns that domestic refiners will not be able to meet demand during the peak summer driving season. The speculative demand adds to the real demand caused by those who consume petroleum products. Moreover, the world growth forecast in oil consumption this year represents the largest since 1988, according to the International Energy Agency.
