Existing oil field output is declining about 4.5% annually, but new fields are making up for that production decline, a study by Cambridge Energy Research Associates concludes, The Wall Street Journal reported Thursday. (Subscription required.)

The annual decline from existing fields is about 4 million barrels per day -- about the amount oil No. 4 oil producer Iran produces per day -- with new fields offsetting the loses. The study is based on data from 811 fields, The Journal reported.

Depletion rates are one measure that oil sector analysts use to gauge current productivity, proven reserves that can be extracted, and probable future production output.

The measure also provides evidence for the ongoing debate in oil circles regarding the ultimate size of oil supplies -- with exploration bulls arguing that oil is decades away from a production top, and others, peak oil theorists, arguing that global oil production is likely to peak in the decade ahead, if not sooner. The debate is complicated by the fact that reliable production data on field-by-field production is not available from several key oil-producing nations, including Saudi Arabia, Iran, Russia, and Venezuela.

Toll without a meter

Independent energy trader Jim Dietz told BloggingStocks on Thursday that the CERA study provides a more complete look at production from existing and new oil sources, but it's by no means a comprehensive survey.

"The CERA study will help analysts and traders determine current oil production, but there's a margin of error. But it doesn't make a great deal of sense to use the study to from conclusions beyond that. Without data on individual fields, projecting future declines in existing field production is a 'guesstimate,'" Dietz said. "It's sort of like having a highway toll with no meter for cars. If you said fewer cars went through the toll today than yesterday, how would you know?"

Dietz said he did not expect the CERA study to affect the markets, and he's sticking with his prediction of a moderation in oil prices to about $80-$85 per barrel by April 1, 2008. Oil fell 99 cents to $89.85 in Thursday afternoon trading.

Oil demand underscored

Dietz said a more important and illuminating question for oil analysts and traders concerns both vehicle use trends and emerging market economic growth. The former dictates gasoline consumption, the latter oil demand in Asia, with the combination ultimately driving the price of oil, in his interpretation. Production -- old fields running out, new fields coming online -- still suggests a slightly larger global oil supply in the decade ahead, but not enough to negate the influence of demand, he said. Hence, the price driver remains the aforementioned demand factors.

Low demand moderates oil's price, for awhile, Dietz said. High demand will keep oil at/above $90 per barrel long-term -- a price that will compel changes by consumers and policy makers and speed the transition to the world's next primary energy source, he said.