Crude Oil Poised for Significant Breakout: Ways to Play

Crude oil prices seem poised for a significant breakout in 2011. Here's why.

Global production of crude oil and condensate has now reached the levels of production seen in 2005 and 2008, just shy of 74 million barrels per day (mbpd) on a twelve month rolling average of production (Source: (EIA)). Six years of frenzied drilling and elevated prices have not yet produced the additional barrels needed by a growing global economy. Prices remain high despite significant unemployment in the OECD and anemic economic growth.

This is very nearly unprecedented. Only in the 1970’s, after OPEC voluntarily held about 10 mbpd in production capacity off the world market to sustain oil prices at artificially high levels, have we had oil production declining over a six year period. Are we perhaps now at “Peak Oil?”