Stuart at Early Warning has a look at global oil production trends - 2012 Global Fuel Supply Still Flat.
I seem to be the only person paying much attention to this, but I still think it's significant. May figures for global liquid fuel supply are out from OPEC and the IEA and they continue to show that global supply has increased very little since January (in contrast to the very strong increases in the second half of 2011).
Other things being equal, we would expect this to lead to rising prices. Instead, prices have been weak/falling as a result of Eurozone fears. The fears about the eurozone are legitimate, but still, at present the global economy has got to be growing, if a little weaker than normal. Only Europe is actually contracting at present and that mildly. Thus, if the fears do not translate into much more pronounced global contraction in reality fairly soon, oil prices could jump up quite a bit. On the other hand, of course, if Europe does turn into a full-blown financial crisis then they could fall further.
There is a strong Schrodinger quality to the oil markets at present: prices are a superposition of the state in which Europe turns into a major global financial crisis, and the state in which it doesn't. I wonder how long before the measurement is made?
Ten days or so ago, I posted the graph above under the headline "Sharp Uptick in Iraqi Production". I chose my words carefully - "uptick" to indicate that this was a movement upward of the same general order of magnitude as other recent movements in the time series, and "sharp" to emphasize that, as upticks in Iraqi production go, this was a somewhat larger and faster one than has been typical (but not, in my judgement, so great as to make the use of "uptick" misleading).
Yesterday, the New York Times decided to report on the same development under the headline "Oil Output Soars as Iraq Retools":BAGHDAD — Despite sectarian bombings and political gridlock, Iraq’s crude oil production is soaring, providing a singular bright spot for the nation’s future and relief for global oil markets as the West tightens sanctions on Iranian exports. ...
I don't object to the graphic. Nor of course do I disagree that Iraq's production has increased and is likely to increase further (I've been covering this for a long time).
But I do really question whether the sober grey-lady paper-of-record should refer to an increase of about 300kbd above the level of last fall as "soaring" in the present tense. I don't think so. I think "soaring" carries a strong connotation of already being way up in the air, or ascending very materially and rapidly. I don't think 300kbd merits that term. I think, if we wanted to use a flight metaphor, we might reasonably say "has begun to take off" or even "looks set to soar". But I think the use of "soaring" in the present tense is an exaggeration. I think this fits in a long-standing pattern at the New York Times of distorted coverage in which positive oil market developments are over-hyped while negative ones are minimized.