High prices, instability keep activity high

In the face of continued strong demand for oil and gas, global crude and condensate output remained roughly even last year, as did reserves, while drilling reached heights not seen since the mid-1980s. This year, the exclamation point on drilling activity should be even more pronounced. Futures crude prices have gone from a $48-to-$55/bbl range two years ago, to a $58-to-$68/bbl interval last year and now a $68-to-$78/bbl trading average in 2006. As this issue of World Oil went to press, the NYMEX price for WTI crude was rising back to the mid-$70s, due to the threat of new, damaging tropical weather in the Gulf of Mexico’s peak hurricane season, plus strong global demand and instability in the Middle East. We need not repeat the litany of reasons for the pressure on global oil and gas production and reserves, as well as the significant hike in drilling.