LONDON (Dow Jones)--"Falling oil output from ageing fields, once insignificant compared with global production, has become large enough to impact world supply and may help explain the constant tightness in the oil market this year, according to analysts.
Oil production is now in decline in at least 18 major producing countries including the U.S., U.K. and OPEC members Indonesia and Venezuela, and total production from this group is falling by around 1 million barrels a day every year, according to the latest data.
The oil futures market can spike on a temporary outage of just a few hundred thousand barrels a day, so what is in effect a permanent outage of 1 million b/d may help explain some of the momentum behind the 53% rise in U.S. crude futures so far this year to near $50 a barrel, analysts who study depletion said.
"Depletion has become a serious issue for the oil market, and I believe it is contributing to market tightness," said Chris Skrebowski, editor of the London-based Energy Institute's Petroleum Review. Skrebowski has studied the issue using data from BP PLC's (BP) widely-read Statistical Review of World Energy data. "What it means is that before you meet a single barrel of demand growth you have to replace all the missing barrels," he continued. "Depletion is really an extra demand. Countries where oil production is still expanding are being put under increasing pressure to make up growing depletion rates. It's a huge drag on the system."
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