The UK’s net oil exports fell in June, throwing the country’s deficit in its balance of trade in goods from £6.2bn in May to £6.5bn in June. Oil trade showed a deficit of $315m, the Office of National Statistics said, compared to a surplus of £100m in May.
Exports of traded goods excluding oil rose by 1.4 per cent month-on-month in June, raising hopes that the competitive pound will help the UK benefit from the gradual improvement in activity in major overseas markets.
The oil deficit swings wildly: it recorded a $500m deficit in March, but less than $100m in February. This latest figure is put down to summer maintenance on UK drilling installations. In other words, a temporary blip, although the long-term trend for UK oil production is not so hopeful – the number of exploration wells is forecast to drop between 41 and 66 per cent this year, and the industry fears that half of the infrastructure could be decommissioned within 11 years.
However there are claims of a downturn in North American production in June which may be less short-lived. Gregor Macdonald has come up with an estimate for oil production, also for June, and says that levels have fallen there, too. He bases this on data from the IEA, EIA, and Opec’s JODI as well as news reports:
Pulling together this latest data on Canadian, US, and Mexican production, I find that total North America is now slipping below 10.200 Mb/day. Based on my work, I believe we will indeed go below 10 Mb/day sometime in the second half of 2009.
Production for the first four months of the year, by comparison, averaged 10.557m barrels per day, higher than the 10.338m average in 2008. However Gregor points out that the highest year of production was actually 2003, when oil prices averaged $31: proving it did not
Why does this matter? My provisional model for annual decline of North American crude oil production uses a rate of 3.83%. That’s probably conservative. Nevertheless, this would entail a final average for 2009 of just below 10 Mb/day at 9.94 Mb/day. By the time of the Presidential election cycle of Q4 2011 to through Q3 2012, North American production would be slipping below 9 Mb/day. To make matters worse, exports from Mexico by that time will be near zero.