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The boom in the price of oil is over, says Mike Rothman, head of oil research at the ISI Group. In an interview with Barron's, Rothman said the demand for oil is not growing at the rate many expected and that more supply is coming on-line.
Rothman goes as far to say that oil demand will show no growth at all in the fourth quarter, with the slowdown in demand coming just as the Saudis are about to ramp up production in a new field that will bring 800,000 barrels per day to the global oil market. Rothman says the Saudis are displeased that higher oil prices are now choking off demand and stimulating interest in alternative fuels. Saudi Arabia wants to ensure that oil demand grows and hydrocarbons remain the fuel of choice.
Growth in non-OPEC supplies will jump 1.3 million barrels per day this year, roughly twice what was forecast. In addition, more big fields will be coming on line at Khursaniyah, Nauyyim, Shaybah and Khurais in the next few years. Also, ethanol production is up 350,000 barrels per day this year and is expected to increase by that figure again in 2008.
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