Energy Industry Trends Review: July 2011

Continuing high oil prices and strengthening demand in 2011 have seen the upstream oil sector showing good growth. Analysts are revising their upstream capital expenditure forecasts upward for the whole of 2011, with some now expecting global exploration and production expenditure to reach $533 billion in 2011—an increase of 14 percent over 2010.

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Key global trends affecting the energy sector in the current economic climate are examined. These include:

• Economic outlook. Global gross domestic product growth in 2011 is expected to drop 0.1 percent to 4.3 percent.
  
  
• Oil supply. World oil supply in July rose by 600,000 barrels/day (b/d) from June, to 88.7 million b/d.
  
  
• Oil demand. Global 2011 oil demand forecasts are down by 100,000 b/d on 2010, due to higher oil prices and slowing economic growth.
  
  
• Oil price. Crude oil prices started the second quarter of 2011 on an upward trend with increasing volatility.
  
  
• Gas supply. Global gas supply continues to increase but the overall trend in the market continues to be the ongoing impact of US shale gas.
  
  
• Gas demand. Short-term gas demand has been boosted by the situation in Japan, which led to higher liquefied natural gas demand.
  
  
• Gas price. The outlook for European gas prices remains positive.
  
  
• Refining. . Global refinery crude throughputs were much improved this quarter, despite continued disruption in Japan and the loss of Libyan feedstock.
  
  
• Mergers and acquisitions. Global M&A transaction values remained at modest levels for the third consecutive month (June 2011).
  
  
• Rig activity. The US onshore rig market is extremely buoyant with the number of rigs drilling for oil exceeding 1,000 for the first time in two decades.
  
  
• Companies. Higher crude prices continue to drive growth and profits at oil companies.