Pescod on Crude

CRUDE OIL
$72.75
+1.33
At $70 a barrel for crude oil there are more
than a few people in the oil patch a little grateful
for what is going on there considering how ugly
things are in natural gas.

With 4 million barrels of production locked
in, in Saudi Arabia and inventory still signifi-
cantly above average levels in the United
States, the price of oil still looks like it could be
vulnerable to some bumps along the way but
for those looking for a little hand-holding about
oil this is probably the chart that will do it for
you.

This shows the production coming out of
Cantarell which was the second biggest oil field
in the world named after a fisherman who found
oil floating to the surface offshore Mexico.
Cantarell is the jewel in the crown of Mexico’s
national oil company Pemex.
The chart to the left shows you what is hap-
pening to this old producer...it’s declining pro-
duction recently at unbelievable rates of as
much as 35,000 barrels a month. One doesn’t
know if it could continue to drop at a level like
this but if it did this field would stop producing
within two years.

That has many implications first of all for
Mexico, suggesting that Mexico an exporter of
oil wouldn’t be able to do that within two years,
plus the national economy of Mexico is so
much dependent on the one third of its’ reve-
nue it collects from Pemex that if Pemex is in
trouble try and balance Mexico’s budget.
Cantarell is all about peak oil and suggests
that down the road oil does have a future.